PRIVATE BUSINESS

London Local Authorities and Transport for London Bill (By Order)

Read the Third time, and passed.

Oral Answers to Questions

ENVIRONMENT, FOOD AND RURAL AFFAIRS

The Secretary of State was asked—

EU Sugar Regime

Peter Bone: If she will make a statement on the future of the EU sugar regime.

Anne McIntosh: What recent representations she has received on the EU sugar reforms.

Jim Knight: As you know, Mr. Speaker, my right hon. Friend the Secretary of State is attending the World Trade Organisation talks in Hong Kong. Under the Secretary of State's chairmanship, the European Union Agriculture Ministers reached an historic agreement to reform the sugar regime, which has remained largely untouched for the previous 40 years. Reform of the sugar regime was a key priority of the UK presidency.

Peter Bone: I thank the Minister for his response, but does he agree that the sugar regime demonstrates everything that is wrong with the European Union? Consumers in the EU pay three times the world price, EU taxpayers pay £1 billion a year and, worse still, farmers in the EU dump their product on developing countries, destroying local farming. Is the reform not a case of too little, too late?

Jim Knight: I was just about to say how much I agreed with the hon. Gentleman, as I concurred with all the reasons why it was important to reform the sugar regime. However, the reform is good for consumers and taxpayers because it will reduce prices and halve the current €7 billion a year cost. It is good for jobs, given that we lost 16,000 food processing jobs while sugar prices were three times the world price, and it is good for growers, because it ends the scandalous distortion under which EU growers receive only £1 for every £5 spent to support them. That is why it has been broadly welcomed by most key UK interests, that is why Tate & Lyle's share price soared after the deal, and that is why it should be welcomed in the House.

Anne McIntosh: The British farmer is not frightened of change, as the Minister knows, but he is only too aware of the pace of change, particularly the question of the rate of compensation and which growers will receive it. Can the Minister explain the future of the British Sugar factory at York, and what alternative break crop is available to arable farmers if the demise of sugar beet takes place?

Jim Knight: As I said, the deal offers the EU big sector sustainability and long-term certainty. The Commission estimated that twice as many jobs would be at risk from failure to reform as from the market-based approach that has been agreed. Farmers will receive more than 60 per cent. compensation for the sugar price cut through the single farm payment, including recognition of the UK's deficit area status. Consultation will take place with the industry on the exact way in which the compensation will be paid. The future of the sugar factory in York is in the hands of the market.

Paddy Tipping: I congratulate the Minister and his colleagues on reform of the sugar regime, which shows that, with commitment, reform of the common agricultural policy can take place, although it needs to go further. As there are consequences for both producers and processors, will the Minister publish details of the scheme as quickly as possible so that decisions about future planting, the operation of the market and its effect on the British Sugar factory in Newark can be made?

Jim Knight: I am sure that as soon as we have the details requested by my hon. Friend, they will be published.

David Taylor: Could the Minister say a little about the impact on African, Caribbean and Pacific countries—especially Guyana, where 35,000 people work in the sugar industry, on which they and their families are heavily dependent? The anticipated changes will reduce their national income by about $40 million per year, which wipes out by a factor of five the $8 million from which they have benefited in G8 debt relief. Will the Minister address the problems experienced by Guyana?

Jim Knight: The UK shares my hon. Friend's concerns and we accept that the deal will reduce prices received by our traditional African, Caribbean and Pacific suppliers and reduce the attractiveness of the EU market for least developed countries. However, EU prices will still be at twice world levels and preferential access will still be guaranteed under the terms of the existing sugar protocol. Contrary to certain reports, the deal contains no new import restrictions. In addition, ACP countries will benefit from a two-year delay in price cuts. The amount of aid has still to be determined and cannot be settled until the new EU financial perspectives are agreed. The UK is pressing for at least €250 million a year over seven years.

Henry Bellingham: As the Minister knows, contrary to popular myth a large number of the growers in East Anglia are not large estates or large farmers. They are smallholders and small farmers and they are a vital part of the rural economy. Will the deal protect their specific interests?

Jim Knight: Certainly, as the details of the compensation are worked out, we will have in mind the hon. Gentleman's constituents—the small farmers who play an important role in the rural economy. Until the details have been agreed, it is difficult for me to add any more.

Climate Change

Simon Hughes: If she will make a statement on progress towards meeting climate change targets.

Elliot Morley: The UK expects to exceed its Kyoto commitment by about 8 percentage points. The UK is committed to moving beyond our Kyoto protocol target and towards our national goal to reduce UK carbon dioxide emissions by 20 per cent. below 1990 levels by 2010.

Simon Hughes: Everybody will be pleased at the progress made over recent days in Montreal, but from the written answer that the Minister gave my hon. Friend the Member for Lewes (Norman Baker) on 29 November at column 312 on greenhouse gases, it looks as though we will not have met our targets over the past two years. To make sure that we can all have confidence that we are going in the right direction, will the Minister agree to annual targets from now on, independently assessed and adjudicated? That way, we   would know that there was no spin and no dishonesty.

Elliot Morley: I agree with the hon. Gentleman that it was a tremendous outcome at the Montreal talks. My right hon. Friend the Secretary of State deserves a great deal of credit and she was much admired for the way that she led the whole EU delegation. Let me make it clear that there are two targets. First, there is our Kyoto target, which is legally binding and which we are well on track to meet and, as I said, to exceed. Then there is our domestic voluntary target of 20 per cent., which we are not on track to meet, but we are having the climate change review in order to ensure that we do so. As regards independent monitoring, the inventory is already independently monitored by the National Environmental Technology Centre, the United Nations framework convention on climate change and the National Audit Office. On individual targets, reductions in CO 2 have been up and down in different years, but we are willing to consider any suggestions that the hon. Gentleman may have.

Mark Lazarowicz: It was indeed a considerable achievement to obtain a Montreal agreement, which I notice Friends of the Earth described as an "historic agreement" that would "strengthen global resolve". The Secretary of State deserves slightly more enthusiastic praise than we heard from the Liberal Democrat Benches. In the spirit of consensus that affects us all nowadays, will my hon. Friend give us an idea of how he intends to build upon the agreement at Montreal, which was a major step forward but will clearly require a great deal of work, at European level in particular, to take it forward?

Elliot Morley: My hon. Friend is right, and there will be further opportunities to discuss the Montreal outcome. It gives us effective rules for implementing the Kyoto protocol, agreement on new targets and frameworks post-2012 and a global approach based on the convention, incorporating all signatories to the convention including non-Kyoto signatories—among them the US and Australia.

James Gray: I hope that one day I will have the opportunity to answer the questions, but on this occasion I shall just ask a question. The Sustainable Development Commission's report, conveniently enough for the Government, is due out tomorrow, but we understand that of all the targets in the report, three are set at red, the rest at amber, and as regards green lights, the Government achieved zero. We know that since 1999 carbon has not reduced at all in the UK; indeed, it has gone up by 9 per cent. Whatever the Government are doing, it is not working. Is it not time that they got together with the Conservative Opposition and perhaps even the Liberal Democrats to find some kind of cross-party consensus to tackle the greatest threat facing the globe for generations ahead?

Elliot Morley: The hon. Gentleman is incorrect—CO 2 has gone up 3 per cent. since 1997. It went up 3 per cent. in 1996—in one year alone—and subsequently fell back. It would have gone up 5 per cent. if not for measures introduced in the 2000 climate change review. There is no room for complacency. We are committed to getting our domestic target of 20 per cent. on track. We will introduce the climate change review and, as our amendment made clear in the recent debate on climate change, we are more than willing to consider ideas from the Opposition. So far, none has been submitted.

Colin Challen: I add my congratulations to the plaudits already given to the Secretary of State for the agreement reached in Montreal. I note that Paula Dobrianski, the US Under-Secretary of State for Global Affairs who was present in Montreal, said that the United States would not welcome formal discussions geared towards a one-size-fits-all approach, which perhaps ties in with the Byrd-Hegel resolution of the US Senate. May I therefore suggest that contraction and convergence are the way forward? That is not a one-size-fits-all approach, and I hope that the Government will provide time for a Bill on that point, which has its Second Reading on 14 July.

David Taylor: Whose Bill is it?

Colin Challen: It is my Bill.

Elliot Morley: The principle of contraction and convergence undoubtedly has some attractive elements, and I am interested in the concept. Given the talks in Montreal, the principle does not appear to command a great deal of international support at the moment.

Peter Ainsworth: You may share my sense of déjà vu, Mr. Speaker: I am here again; you are there; the Minister is in his place; and the Secretary of State is not here—so not much has changed. I am sorry that the Secretary of State is not here because I want to place on the record my congratulations on her personal contribution to the limited success of the Montreal discussions. However, it will need more than an agreement to talk to reduce the risk of a catastrophic slide into climate change. Will the Minister reconsider his answer to my hon. Friend the Member for North Wiltshire (Mr. Gray)? Just as it is vital to have international agreements to tackle climate change, is it not vital to have a cross-party approach to tackling those issues in order to set a framework in which to deliver climate change emission reductions?

Elliot Morley: I welcome the hon. Gentleman back to the Front Bench, although given his chairmanship of the Environmental Audit Committee and the number of times that I have appeared before it, he does not appear to have been away. I welcome his recognition of the crucial role played by my right hon. Friend the Secretary of State at Montreal, but he will find that non-governmental organisations and the international community think that the agreement was much more significant than his assessment. I welcome an approach based on consensus, and a consensus exists within this House on the principles, which is helpful in tackling the real environmental threat. On exploring that consensus, however, we need to know where the Opposition stand, and I repeat my invitation to them to spell out their position and ideas on climate change, because we cannot wait for 18 months while the matter is referred to a working group.

Peter Ainsworth: We will spell out our considered recommendations in due course, and I look forward to working with the Minister on them. Does he accept that normal politics are not working when it comes to climate change, because the problems are too long term and too great? May I press him again on the concept of an independent body that transcends individual Parliaments, individual Governments and individual changes in party leadership, in order to monitor progress, set targets and achieve progress against those targets? The Government are trying to provide leadership internationally on that vital issue, but that should not be undermined by failure to make progress at home.

Elliot Morley: I do not disagree with those general points, but Conservative Members have not done enough homework on the procedures by which our progress is audited. Our targets and the inventory are calculated by an independent organisation, the National Environmental Technology Centre, by the United Nations framework convention on climate change and by the National Audit Office. Those are respectable bodies that provide independent assessment, but if the hon. Gentleman does not think that they are adequate, I would be willing to consider his points.

Edward Balls: Will my hon. Friend report to the House on progress on building an all-party consensus on the measures that are needed to meet our climate change targets? Has there been any indication thus far that the main Opposition party intends to drop its opposition to the climate change levy?

Elliot Morley: No. I know that my right hon. Friend the Prime Minister pressed the Leader of the Opposition on that, but as far as I understand it, the position of the Conservatives is that they are against the climate change levy, which has made a significant contribution in reducing CO 2 . If they have changed their position, I will be willing to hear about where they stand now.

Norman Baker: I add my congratulations to the Secretary of State for her efforts in Montreal. She has done a very good job. I look forward to her perhaps taking over the Office of the Deputy Prime Minister and the Department for Transport as well.
	The Minister will agree that in order to deal with climate change it is important to get renewable technology up and running. Can he therefore explain or justify the fact that £210 million of the £270 million raised so far under the non-fossil fuel obligation fund has been siphoned off by the Treasury under the cloak of the Civil List Act 1952? Does he agree with that new Treasury stealth tax?

Elliot Morley: I do not agree that it is a stealth tax. If the hon. Gentleman looks at the overall accounts in relation to the Treasury books, he will find that, yes, some of that money goes into the Treasury, but the Treasury pays out a great deal more in terms of overall support to renewables. The money is not simply siphoned off.

Biofuel Industry

Ashok Kumar: If she will make a statement on the biofuel industry.

Elliot Morley: The UK is on course to achieve our target of 0.3 per cent. use of biofuels by the end of 2005. A renewable transport fuels obligation will be introduced to require 5 per cent. of UK fuel to come from a renewable source by 2010. Biofuel processing plants are being established in the UK, which will include feedstocks sourced from the UK.

Ashok Kumar: I thank my hon. Friend for that reply and add my congratulations to the Secretary of State for all the efforts that she has made at the United Nations conference on climate change. I also give great credit and praise to the Department for reducing carbon emissions.
	Will my hon. Friend consider the Australian model of bringing the biofuel industry, oil companies, petrol retailers, car manufacturers and consumer groups together to give greater focus and attention to meeting our targets in 2010? That represents a great opportunity, and I hope that he will consider setting up such a body.

Elliot Morley: I very much welcome my hon. Friend's interest in biofuels, and the fact that Teesside appears to be developing as one of the centres of biofuel production. I have looked at the Australian model. It is worth saying that the prime reason for setting up the Australian committee was that there were problems with consumer confidence in biofuels, particularly ethanol. That is not the case in the UK, where the mix of 5 per cent. is accepted by all car companies. However, it is important that we look at ways in which we can encourage the uptake and development of a biofuel industry in the UK, and I will give my hon. Friend's suggestion serious thought.

Philip Hollobone: Biofuels are the great hope for British arable farming. Farmers in my constituency are keen to grow biofuels but tell me that the economics are not yet right. What encouragement can the Minister give them that the Government will address this issue properly?

Elliot Morley: An obligation of 5 per cent. on the oil companies is a considerable driver in relation to the demand for biofuels and the opportunities for supplying them from the domestic market. I should point out to the hon. Gentleman that farmers are allowed to grow biofuel crops on set-aside land, for which they already receive a payment. They get a payment for the set-aside and a payment for the crop, and there is also the encouragement of a 20p per litre discount.

Nia Griffith: Will my hon. Friend have urgent talks with Treasury colleagues in order to restore the tax concessions on biodiesel that is made from vegetable oil collected from restaurants and canteens, which represents an even better use of the world's resources than biodiesel directly derived from plant sources?

Elliot Morley: There has been no removal of tax concessions for biodiesels from crops or recycled cooking oil. The problem is whether the biofuel fulfils the quality standard to qualify for the discount.

Richard Benyon: With biofuels responsible for only 0.25 per cent. of road fuel sold, how is the Minister's target for 2010 of 5 per cent. of road fuels sold progressing?

Elliot Morley: The current target is 0.3 per cent., which we met in 2005. The target of 5 per cent. will be ramped up from 2008 onwards. I have no doubt that we can meet that target. We need a stepped approach to avoid simply sucking in large quantities of imports. It is inevitable that imports will account for some of the market, but the Government want a viable industry in this country involving local growers and processors.

Milk Prices

James McGovern: What recent discussions she has had with dairy farmers on the price of milk.

Ben Bradshaw: Provided that competition law is respected, the Government do not get involved in discussions about price. However, issues around the state of the industry are regularly discussed in the dairy supply chain forum, which is chaired by my noble Friend Lord Bach.

James McGovern: I thank my hon. Friend for that response. Notwithstanding that, with milk prices low and dairy farmers struggling, will he assure dairy farmers that today's statement on bovine TB will not have a detrimental effect on milk prices and producers?

Ben Bradshaw: The measures that we have announced this morning—we also have an urgent question on the matter later—will help the dairy industry. There will be no quick fixes in the measures on bovine TB, but they will make a difference in the medium and long term.

Nicholas Winterton: Does the Minister share my concern and unhappiness about the fact that several efficient long-standing milk producers in my constituency have gone out of dairy production? Is he worried that the dairy trade and the superstores exercise too much influence? They make huge profits while dairy farmers, who manage the land that is so important to this country, are forced out of business by the price that they receive.

Ben Bradshaw: I agree that it is worrying when efficient dairy farmers go out of business. Many may choose to do that for commercial or other reasons. However, farm-gate milk is at its highest level since October 2001 and there is also the dairy premium. It is important to consider all the issues, including the role of supermarkets, which, as the hon. Gentleman knows, is constantly reviewed by the independent competition authorities.

Brian Jenkins: We all recognise the problem with the milk industry. It is not on the farmers' but the purchasers' side. We have an oligopoly in Britain, with large supermarkets exercising their purchasing power. Does my hon. Friend feel frustrated that while the Department is trying to knit together deals with farmers and supermarkets, other Departments are considering ideas to strengthen the position of supermarkets by extending the hours and taking out further competition?

Ben Bradshaw: If the issue to which my hon. Friend refers is the suggestion that Sunday opening hours may be extended, he has an ally in me as a member of the Union of Shop, Distributive and Allied Workers. I have already dealt with the question about milk in my reply to the hon. Member for Macclesfield (Sir Nicholas Winterton). The independent competition authorities constantly review the role of the supermarkets.

William McCrea: The Minister says that the Department will not get involved in determining the price of milk, yet in Northern Ireland, at the most recent auction of United Dairy Farmers, which is the largest processor, it fell by more than 10 per cent. We believe that that happened as a result of the recent common agricultural policy reforms. Does the Minister believe that there will be a viable milk industry in the United Kingdom if the Government succeed in achieving another major reform of CAP?

Ben Bradshaw: Yes, I do. Those who know our dairy industry and our climate all recognise that the United Kingdom, including Northern Ireland and my part of the world, is extremely well suited to dairy farming. We could do extremely well if the common agricultural policy were reformed even further, as our dairy farmers would flourish.

Michael Foster: Further to the point made by the hon. Member for Macclesfield (Sir Nicholas Winterton), the retail price of a litre of milk in 1996 was 63p. In 2004, it was 62p—a fall of 1p. But the price that farmers are paid for a litre of milk has fallen by 7p over that same period. Somebody else is making 6p a litre more, and I think that we know who that is likely to be. May I urge my hon. Friend to use his good offices to introduce a more co-operative approach between the retailers and the dairy farmers, before irreparable damage is done to the dairy industry?

Ben Bradshaw: I can assure my hon. Friend that we will do that. My noble Friend Lord Bach and the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for South Dorset (Jim Knight), are meeting fellow Ministers in the Department of Trade and Industry shortly to discuss the supermarket code of practice and competition matters affecting the dairy sector.

Bill Wiggin: We have heard about the parlous state of dairy farming from hon. Members on both sides of the House. According to the statement today, the costs to dairy farmers are going to increase further because of the cost of the pre-movement test. Why will the Minister not insist that vets should not charge farmers more than they charge DEFRA for those tests?

Ben Bradshaw: If the Conservatives are suggesting that there should not be a fair balance of costs between the taxpayer and the industry, that is very interesting. We think that it is right that if the Government are introducing measures that will benefit the dairy industry through reducing the levels of bovine tuberculosis, the costs should at least be fairly shared.

Landfill Waste

Tim Loughton: How much waste went to landfill in 2004–05.

Ben Bradshaw: An estimated 81 million tonnes of waste was sent to landfill in England in the last year for which we have figures. That is 45 per cent. of the waste stream, compared with 50 per cent. in 1998–99.

Tim Loughton: We are running out of landfill sites, and the Minister will be aware that some 90 per cent. of household electrical goods are dumped into landfill. The future is unclear because of the complete Horlicks that the Government are making over the waste electrical and electronic equipment directive. In the meantime, however, charitable organisations such as the GreenHouse project in Worthing, of which I am a patron, are doing great work to promote the reuse of electrical goods and household furniture, which is restored and sold on at a discount to families on benefits to help them to kit out their homes. These are fantastic projects. What is the Minister doing to promote that kind of innovative reuse?

Ben Bradshaw: I am very interested in the project to which the hon. Gentleman refers. He is welcome to write to me about it, because it is the kind of project that the Government are doing a great deal to support. We have an excellent record on recycling, compared with the miserable record that we inherited from the previous Conservative Government. We have trebled the rate of recycling in eight years. His question about the WEEE directive needs to be referred to my colleagues at the DTI.

Barry Sheerman: Does my hon. Friend agree that we still have far too heavy a dependence on landfill in this country? Is he aware that a European framework agreement that is expected to be finished early in the new year states that no European nation will have any landfill after 2010? We could not possibly meet that target. Representatives of the industry are universally saying that they have not been consulted on this matter or called in to talk to the Minister's Department. Is it not time that the Department got moving?

Ben Bradshaw: No, I do not accept that. My hon. Friend is talking about something that is not a legally binding directive; it is a discussion document. Our landfill targets are certainly challenging, and we will have to do a lot better than we are at the moment if we are to meet them. However, I would point out to my hon. Friend that we are not doing badly. As I said, we have trebled our recycling rates in the past eight years. We are also reviewing our waste strategy to see whether we need to set even more ambitious targets. However, we are improving from a very low base. We had the worst record in Europe on landfill under the previous Conservative Government.

Daniel Rogerson: Given that one of the significant waste streams that could be diverted from landfill is organic matter, when will the Government define when compost ceases to be waste and can be classified as a product? The lack of that qualification is hampering the development of markets for the output of sustainable waste management.

Ben Bradshaw: The hon. Gentleman makes an important point. He will be aware that this matter is being discussed at European level. However, that does not mean that we should take our foot off the accelerator in regard to composting. Composting rates in this country are showing encouraging increases, as are our recycling rates.

Alan Whitehead: I am sure that my hon. Friend, like me, will welcome the increase in the landfill levy escalator that will take place next year. Is his Department considering ways in which a fraction of the percentage increase in that escalator could be returned to business for the purpose of recycling and reuse of materials, as has already been done this year?

Ben Bradshaw: My hon. Friend will be aware that the landfill tax escalator is not intended only to incentivise local authorities to divert waste away from landfill, in which it has been successful, but to recycle the money raised through schemes such as the Waste and Resources Action Programme. That scheme advises business and helps local authorities to increase their recycling and waste minimisation and to improve and find better markets for recycled goods, as certain materials pose a number of challenges.

Andrew Turner: The Minister and the Environment Agency followed up effectively my question to the Prime Minister about the designation of pet cemeteries as landfill. I know that the Environment Agency has recommended that his Department adopt a new position. When will he make a decision on that recommendation?

Ben Bradshaw: I am pleased that the hon. Gentleman was happy with the response elicited by his question. My understanding was that we had already made a decision in principle, along lines that would have met his wishes, and that the matter was now resting with the Environment Agency. I pledge to check up on that and I will write to him about it.

Climate Change

Ben Chapman: If she will make a statement on the role of developing countries in the Montreal climate change talks.

Elliot Morley: The developing countries played a positive role in the Montreal climate change talks. They supported a process that will consider further commitments of developed countries under the Kyoto protocol as well as dialogue among all parties on long-term co-operative action to address climate change by enhancing implementation of the United Nations framework convention on climate change.

Ben Chapman: Will my hon. Friend join me in welcoming the fact that China, despite being driven by the need to cater economically for its growing 1.3 billion population, has been a key supporter of the Kyoto process, and that, as the world's second largest producer of greenhouse gases, it will, along with other developing countries, play a key role in future climate change talks?

Elliot Morley: Yes, I agree with my hon. Friend. I found the atmosphere at Montreal, in relation to the views and co-operation of developing countries, much better than at Buenos Aires last year. One reason for that was the successful Gleneagles process involving China and India. The Gleneagles dialogue, which came out of that process, with the first meeting on 1 November, helped to build confidence and pave the way for the successful outcome in Montreal. China played a positive role in that, as did other major emerging economies.

Michael Jack: Welcome as the Minister's comments about the new co-operative atmosphere with China are, China builds each year the equivalent of the United Kingdom's entire power output, predominantly using coal. What has China committed itself specifically to do to engage in the process of reducing greenhouse gas emissions, along with India? How will the Government persuade the United States to participate fully in that whole programme? Without that, China and India will carry on saying comfortable things but not contributing positively to reducing greenhouse gas emissions.

Elliot Morley: It is true that China and India are not annexe 1 countries and are not therefore obliged to take targets. It is also true that what the United States does has an influence on all countries. I do not dispute that. China is engaging positively, however. In the EU-China summit, we agreed co-operation with China for a near-zero coal-burning power station as a demonstration project to develop that technology. China is moving ahead on a range of technologies, including renewables, as is India, and both those countries are keen to engage in the clean development mechanism, which also transfers technology and investment from developed countries to developing counties. All those framework issues were agreed at Montreal.
	As far as the United States is concerned, what struck me at Montreal was that a number of American companies, American organisations, American states, American mayors and, not least, a former American President attended to say that their Government should do more. I am sure that that bottom-up pressure will have an effect on the attitude of the Administration in due course.

Jim Sheridan: My hon. Friend may be aware of a report produced recently by the all-party group on the Niger delta. According to the report, the development of that part of the world has been held back by absolute corruption at every level of government. Will he read the report, especially the part dealing with the role of oil companies, which are using gas flares, destroying the environment and choking to death the poor people in the community surrounding the oilfields?

Elliot Morley: My hon. Friend is clearly very knowledgeable about such matters and I have a great deal of sympathy with what he has said, which goes well beyond the climate change conventions.
	The oil companies are drawing up agreements on reducing gas flaring and taking action. I hope that we shall soon see a range of improvements in environmental quality and an engagement in social issues in all parts of the world including the region mentioned by my hon. Friend.

Gregory Barker: Developing countries stand to be among the hardest and first hit by climate change. In combating climate change, it is essential that we are not seen, particularly in the poorest developing countries, as a brake on their drive for greater prosperity. While much progress is needed on a number of fronts, does the Minister agree that improving the efficiency of the energy sector in the developing world, especially electricity supply, is an important way of cutting the growth in emissions without hindering economic advance? What are the Government doing internationally to promote carbon reduction through energy efficiency?

Elliot Morley: I welcome the hon. Gentleman to his new position and look forward to debating with him.
	Energy efficiency is a key issue in the developing countries. One of the main ways of achieving it is the application of the clean development mechanism. Under the leadership of my right hon. Friend the Secretary of State, the European Union has pledged significant sums to the board of the clean development mechanism to be invested in clean energy, energy efficiency and similar programmes. The Gleneagles conference itself was carbon-offset by the Government, and the offset funds have been invested in a clean development mechanism in Cape Town.

Sea Walls

Mark Francois: What representations she has received on guidance to farmers on the maintenance of sea walls; and if she will make a statement.

Elliot Morley: We have received representations from the hon. Gentleman and others about the need for guidance for landowners who wish to maintain sea walls at their own expense on, for instance, the implications of the habitats regulations. The Environment Agency expects to consult on such guidance shortly, and will report on progress at the end of January.

Mark Francois: I genuinely thank the Minister for his reply. He is aware from our previous discussions that farmers are being caught by the habitats directive, although I do not think that that was intended to happen when it was produced. I am pleased that there is to be consultation and that we can hope for an answer by the end of January, but can he give us an idea of when he thinks the guidelines themselves will be produced?

Elliot Morley: According to the latest information from the Environment Agency, it will produce them as soon as possible. I shall be happy to obtain a more precise date and write to the hon. Gentleman, because I am aware of his interest.
	As the hon. Gentleman will know from our discussions, balancing national expenditure and investment, environmental issues and the need for long-term sustainable flood defences is a complicated process. We are trying to get the balance right, as outlined in the policy document "Making space for water", but I am more than ready to take account of the representations that he has made on behalf of his constituents.

Common Agricultural Policy

David Borrow: If she will make a statement on reform of the common agricultural policy.

Jim Knight: We secured major improvements to the CAP in 2003 and 2004 and again last month, on the sugar regime. In the EU budget discussions, we are pressing for further fundamental reform, and my right hon. Friend the Secretary of State is in Hong Kong this week working for agreement on the liberalisation of agricultural trade.

David Borrow: May I refer my hon. Friend specifically to the current discussions in Hong Kong? Does he share my concern about the fact that, whereas we in the House of Commons face considerable pressure from civil society to reform agriculture policy by reducing subsidies and removing trade barriers, there seems to be no such pressure on politicians in France?

Jim Knight: I cannot disagree with my hon. Friend. We are working for a successful outcome to the World Trade Organisation negotiations this week, which could bring significant benefits to developing countries, cut consumer costs and lead to wider economic benefits for Europe. Given the Secretary of State's negotiating triumph on CAP reform in 2003, her triumph on REACH—registration, evaluation and authorisation of chemicals—and on sugar during the UK presidency and her most recent triumph in Montreal at the UN climate change conference, I cannot think of a better person to lead those difficult negotiations than her.

Angus MacNeil: Given efforts to reform the common agricultural policy, will the Department, with the same political capital, consider reform or abolition of the common fisheries policy?

Jim Knight: We do not see any merit in the abolition of the CAP, which is important in ensuring a level playing field for our farmers. Without it, they would undoubtedly suffer competitive disadvantage.

Michael Connarty: The symbol of the Scottish National party is a fish rather than anything else. That is all there is.
	On the question of the CAP, should not the Government take some of the blame? In 2002, they signed up to a modification to the CAP that did away with the link to production. It still costs a vast amount of the EU budget. We trapped ourselves into that position because we wanted enlargement. Now we are trapped in there to 2013. Anything positive that we can do should not be done on the basis of nationalistic arguments, but by convincing all the 25 countries that there should be a substantial modification to the principles of the common agricultural policy in Europe.

Jim Knight: A great deal has been done. The reforms of 2003–04 break the link between the bulk of subsidy and production and make subsidy dependent on meeting environmental, animal health and welfare standards. It is hugely significant that we managed to break that link, making the CAP significantly less trade distorting and less environmentally damaging. Clearly, there is much more that we need to do. That is why the UK is at the forefront of those calling for reform, which will help farmers become more competitive, benefit taxpayers and consumers, improve the environment and increase opportunities for developing countries.

Roger Williams: I am sure that the Minister agrees that the recent reform of the CAP has eliminated the financial incentives for farmers to engage in food production. Before he embarks on any further reform, will he make some assessment of food security in this country, because I can assure him that a hungry nation will not be a happy nation?

Jim Knight: I caution the hon. Gentleman about saying that we have removed the incentives for food production. What we have done is made it easier for farmers to grow to the market rather than to grow to subsidy. That is the importance of the reforms of 2003–04. Food security is important as we obviously need to ensure that people have enough food on their tables, but in the globalised world in which we live, I have every confidence that the current regime is sufficient to meet and indeed go beyond those food needs. For all the reasons that I have stated, further reform remains important.

James Paice: Two weeks ago, the Government published "A Vision for the Common Agricultural Policy", which suggested that future support should be concentrated on pillar two payments for environmental benefits and rural development. My party wholly supports that principle. Last week, however, the Government's proposals for the EU budget included cutting £40 million from pillar two. Why?

Jim Knight: It is important to achieve a negotiated settlement on the future financing of the EU for the benefit of all member states and all their residents, but we are committed to sustaining the level of payments within pillar two. That is why voluntary modulation is part of our present position, ensuring that we can move money across from pillar one to pillar two to sustain the important work that I am glad the hon. Gentleman agrees should be continued.

Climate Change

Joan Ruddock: If she will make a statement on the outcomes of the climate change talks in Montreal.

Elliot Morley: The outcomes of the conference in Montreal are hugely significant. The Kyoto parties agreed to launch a process for agreeing new greenhouse gas targets beyond 2012 and all parties agreed to review the framework convention with a view to ensuring a truly global effort to tackle climate change. The Kyoto protocol was strengthened with the adoption of the Marrakesh accords compliance mechanism and greater support for the Kyoto mechanisms.

Joan Ruddock: May I add my congratulations to the Secretary of State on her skill and leadership in negotiating in Montreal and on the very successful outcome? My hon. Friend the Minister heard today of the 50 dirty coal power stations being built in China per annum. Does he agree that one EU demonstration plant for clean coal technology is insufficient in the light of those emissions? Does he have any plans for bilateral technology exchange with China and will he look to the Export Credits Guarantee Department to see what help can be given to UK industry, which is now a leader in this field?

Elliot Morley: It is certainly true, given China's energy demands, that one clean coal plant is not enough, so I entirely accept my hon. Friend's point. We are co-operating with the Chinese on a range of issues—biomass, waste collection and renewable energies, for example—and other European countries also have co-operation programmes with China. There is no doubt that, although China wants to combat poverty through economic growth, which we can all understand, it recognises the great implications of climate change in terms of air quality, water shortage and floods. Those issues are as important to the Chinese Government as they are to all Governments throughout the world, which is why we believe that such co-operation will be extended and that China is serious about tackling climate change.

Mark Pritchard: On climate change, does the Minister agree with his noble Friend Lord Sainsbury, who suggested that new nuclear is now the new green energy?

Elliot Morley: The hon. Gentleman should ask Zac Goldsmith, who is a member of his own party's working group, whether he agrees with that. The Prime Minister has announced an energy review, which is the responsible and sensible way forward. We need to look at this country's long-term energy demands and at energy efficiency, the range of energy mixes and the costs associated with the various energy generation options. The review will answer some of those questions.

David Chaytor: My hon. Friend will know that some of the biggest challenges that lie ahead relate to constraining emissions in the transport sector. What are the prospects of achieving all-party consensus on the greater use of environmental taxation as a means of reducing transport emissions? Does he think that the basis exists for a consensus on a more progressive form of taxation to deal with gas-guzzling 4x4 vehicles, which would be hugely popular with the 95 per cent. of the population who do not drive 4x4s?

Elliot Morley: It is not just 4x4s that guzzle gas. Other models also do so, but I understand my hon. Friend's point. If we are going to have a consensus—there are good arguments for having one—there are some difficult issues that we have to address. For example, with rising world fuel prices and with some people taking to the streets and putting up blockades, we need to argue the case for achieving the right balance of environmental taxation to reflect the environmental impact of road transport, rather than trying to get a few populist headlines by talking about cutting fuel duty, given the chance to do so. The opportunity exists for all parties to address these issues, including differential rates of taxation, in a mature and sensible way. I look forward to that debate.

Recyclable Waste

Andrew Rosindell: If she will make a statement on the shipment abroad of recyclable waste collected in England by local councils.

Ben Bradshaw: There is nothing wrong with the export of recyclable waste, provided that the strict rules applying to this trade are adhered to. The growing international market for recyclables helps to boost recycling in Britain and the more sustainable use of the world's resources.

Andrew Rosindell: The Minister will be aware that, according to the Environment Agency, half the 8 million tonnes of green bin material thrown away in the UK is sent overseas, often to third-world countries that have great difficulty in managing their own waste. How does he intend to reassure people in this country that it is worth continuing recycling if we cannot even cope with the situation here?

Ben Bradshaw: It is not the case that we cannot cope. As I said, there is a legitimate trade in recyclable materials and in the growing economies of China and India, in particular, there is huge demand for paper and plastic. We should welcome that, as it means that trees are not being cut down instead, but very strict rules apply to the export of such material. They are important, and the Environment Agency has an enforcement role: it has already taken out prosecutions and is investigating a number of other cases. It is important to reassure householders so that they continue to recycle. They are doing much better than they have ever done, but need to do a lot better yet, safe in the knowledge that the vast majority of what they put aside is genuinely recycled in a sustainable way.

Vincent Cable: Large amounts of recyclable waste are not being recycled, but is not one reason for that the fact that the system of Government targets encourages councils to collect small amounts of such waste from large numbers of households? In contrast, a great deal of trade waste—from florists, or paper from offices, for example—is not being collected and does not count against the targets.

Ben Bradshaw: It does not count against certain targets, but the hon. Gentleman will know that we are doing better on recycling business and commercial waste than on recycling domestic waste. The Government will look carefully at all those matters in the waste review that we intend to begin early in the new year, with the aim of developing a new waste strategy by next summer. He is right that there are a number of what some people might call perverse incentives in the system and we hope to tackle them in the review.

Colchester Oysters

Bob Russell: When she expects an announcement to be made on the application to give protected geographical indication status to the Colchester oyster.

Jim Knight: It is difficult to predict when a final decision on the application to give protected geographical indication status to the Colchester oyster will be made. The application is at an early stage and there are several more steps to go through before the European Commission can take a decision on the application.

Bob Russell: I am grateful to the Minister for the progress that is being made and urge him to keep the pressure on. He will be aware that oysters from Colchester were shipped to the eateries of Rome a good 2,000 years before the treaty of Rome.

Jim Knight: I am certainly aware of the excellence of the Colchester oyster. I am sure that the whole House will celebrate Christmas with top-quality British food, of which Colchester oysters are a fine example. I am sure that the hon. Gentleman's great strength in advocating his constituency is informed by his consumption of Colchester oysters.

Farming (Government Support)

Edward Leigh: What steps she is taking to target Government support for farm businesses at family-run small and medium-sized farms.

Jim Knight: The Government's sustainable farming and food strategy aims to create a framework that will encourage all farmers to improve their business performance while managing their land and natural resources in a sustainable way, and to contribute to strong, healthy communities by producing safe, quality food that consumers want to eat. Within that framework, support is provided to help farm businesses of all sizes adapt to the opportunities and challenges of the future.

Edward Leigh: I was going to ask about the recommendation from the Public Accounts Committee in favour of a farm advisory service, but does the Minister agree that that would be a mere palliative for the crisis facing our smaller farmers? Is it not absurd that one absentee landlord in my constituency, who allows people no access to his land, receives £2 million a year from taxpayers, while other small family concerns that have farmed 100 or 200 acres in my area for generations are in dire poverty? What is he doing to argue the case for shifting subsidies away from production and acreage and towards incomes—for instance, through a working farmer tax credit?

Jim Knight: We are ensuring that the farming industry becomes productive and competitive, and that means that we do not want to differentiate between the size of farms, as we need to reward those who are growing properly for the market. That said, we are considering the next round of the England rural development programme, which will include measures to support the farmers to whom the hon. Gentleman referred, along with many others.

Recycling

Jim Cunningham: What plans her Department has for increasing the range of materials collected for, and improving the efficiency of, recycling.

Ben Bradshaw: We provide significant help to local authorities' recycling through the Waste and Resources Action Programme. In addition, the Household Waste Recycling Act 2003 requires waste collection authorities to provide kerbside collection of at least two recyclable materials by 2010.

Jim Cunningham: How is my hon. Friend assisting local authorities to dispose of certain items, especially electrical items such as refrigerators? There are many dumps around the country, but there does not seem to be any movement towards getting rid of them.

Ben Bradshaw: Significant grants are available through the programmes to which I referred in my answer to help local authorities both develop facilities for recycling and receiving such electrical waste and provide a collection service. Some charge a small fee. That is better than people being tempted either to fly-tip or to use rogue operators to fly-tip, for which they are now liable to significant fines under the Clean Neighbourhoods and Environment Act 2005.

Dog Training Collars

Tony Baldry: What discussions she has had with the Kennel Club in the context of the Animal Welfare Bill on the use of electric shock training collars on dogs.

Ben Bradshaw: I met the Kennel Club in the summer to discuss the issue of electric shock training collars in the context of the Animal Welfare Bill.

Tony Baldry: I am sure that the Minister will have heard from the Kennel Club, representing responsible breeders, that there is no justification at any time for electric shock training collars. We will have before us the Animal Welfare Bill in the new year. Can he give a simple commitment that this form of cruelty of electric shock training collars for dogs will be abolished?

Ben Bradshaw: I am afraid that I cannot give the hon. Gentleman that commitment. Some contest the claims made against such training collars. Some trainers and individual owners say, for example, that they have used such a collar once and it has prevented their dog from chasing sheep and they have never had to use it again, so they have helped themselves and farmers. There is a debate to be had. We have committed the Government to conducting some research because I am not in favour of banning things unless there is good evidence for so doing.

Bovine Tuberculosis

James Paice: I am grateful to you, Mr. Speaker, for allowing me to ask an urgent question, of which I have given notice. Will the Secretary of State for the Environment, Food and Rural Affairs make a statement on the conclusions of the independent study group on the triplet studies of bovine tuberculosis and what action she proposes to take?

Ben Bradshaw: This morning the Government announced new measures to tackle bovine tuberculosis. At 9.30 am, a written statement was published. These measures include a 12-week public consultation on the control of badgers to reduce the disease in high incidence areas, the introduction of a requirement for the pre-movement testing of cattle to reduce cattle-to-cattle spread, and changes to the compensation arrangements that will bring payments for bovine TB into line with those for three other cattle diseases. Copies of all the relevant documents have been placed in the Libraries of both Houses and are available on the Department for the Environment, Food and Rural Affairs website.

James Paice: I am grateful to the Minister for his reply and earlier conversation with me.
	This year roughly eight times as many cattle will be slaughtered as in 1997 from reactions to TB tests. Herd incidence is rising at 20 per cent. a year. The whole farming world believes that the Government have spent the past eight years putting off what we all recognise is   a difficult decision. However, I welcome the introduction of pre-movement testing, for which we have been calling. I ask the Minister to reflect again on the answer that he gave to my hon. Friend the Member for Leominster (Bill Wiggin). I do not think that he fully appreciated the question that was being asked.
	Can the Minister tell us whether there will be a regional basis for pre-movement testing or does it apply automatically across the whole country? Will he publish the proposed table for compensation under the new arrangements? Will there be an opportunity for farmers to appeal against whatever is allocated to them?
	I welcome the extension of gamma interferon tests, but why do the Government persist in their own little world of trials of testing systems? Is it not clear from other countries that gamma interferon and polymerase chain reaction can significantly improve test results and reduce the culling of unhealthy cattle, and can indicate whether badgers in a particular sett are carrying TB? It is worth emphasising that badgers suffer mercilessly from TB.
	Why have the Government not published specific proposals for badger culling? Is it not clear that the low level of trapping in the triplet studies, down to 30 per cent. in some areas, has caused massive disturbance, making badgers move into adjoining areas, thus spreading the disease rather than controlling it? Does the Minister agree, therefore, that only by efficient and humane culling of whole family groups can we be certain of removing infected animals?
	We agree that strict cattle controls and better testing are necessary, but alone they will not work. I believe that the Minister will have general cross-party support for a badger culling programme. Such a decision is clearly distressing and unwelcome, but it is inevitable and the further delay for another consultation is unnecessary. We do not wish, however, to create a badger-free zone, so will the Government develop a plan so that badgers from clean areas can be reintroduced once the infection has disappeared? Then we can have what we all desire: healthy cattle and healthy wildlife.

Ben Bradshaw: I am grateful to the hon. Gentleman for his comments and questions. He is right to stress that this is a health and welfare issue for badgers as much as for cattle. It is not quite fair of him to say that the Government have been putting off a decision for six years. After all, the Government initiated the Krebs trials. No previous trials had been conducted by Governments to get to the bottom of the role played by badgers and, indeed, the extent of that role. I think that he would be the first to acknowledge that there is still a lot of uncertainty in the science.
	Far from putting anything off, we brought this announcement forward to today; a lot of people did not expect the Government to say anything until 2007—a year after the Krebs trials finish. The hon. Gentleman asked why have a delay and a consultation now, but he should accept that it would not be right to jump to conclusions less than 24 hours after we have received the results from the very long-running and important tests. I want hon. Members and other people to have the opportunity to take a careful and, I hope, calm and rational look at not just the results of the Krebs trials, but the experience gained in the Republic of Ireland and elsewhere in the world. The executive summary to the document that we published today states:
	"international experience indicates it is not possible to contain and eradicate bovine TB if its background presence in wildlife is left unaddressed."
	We go on to say:
	"The scientific evidence shows that intensive culling of badgers over large areas can be effective".
	The hon. Gentleman is right to highlight the dilemma that is posed by the results that were published last night by the independent scientific group on cattle TB, which showed a significant benefit in terms of the incidence of bovine TB in the area where badgers are culled, but a significant disbenefit in a circle around the periphery. It also showed, however, that the balance of benefit tended to improve with the intensity of culling and with the size of area. It is clear that a number of uncertainties still exist, which is why the Government think it important to have a proper, full and open consultation.
	In answer to the hon. Gentleman's question about pre-movement testing, it will not be regional as such, but for the first year at least, there will be a requirement for all cattle moving out of one and two-yearly testing herds. It will depend on the incidence of TB, rather than on an arbitrary regional boundary. Yes, we will publish the tabulation system for compensation, if it has not been published already in the documents before the House.
	I am sorry that the hon. Gentleman does not think that I responded to the point made by the hon. Member for Leominster (Bill Wiggin) on pre-movement testing and the charges. I did not quite understand it—perhaps someone else may like to put it to me again during this session—but the testing will be a private transaction between a farmer and a vet. Certainly, DEFRA has no intention of profiteering or charging more than would otherwise be charged. Indeed, our objective is to roll out testing by lay testers, which should significantly reduce the cost to farmers.
	The hon. Gentleman asked about gamma interferon and PCR. It is important to stress that nothing that we are announcing today means that we can take the foot off the accelerator in terms of the work that is already going on to develop a vaccine both for badgers and for cattle, or to develop a PCR. He is not quite right to suggest that we have already got a reliable PCR test for bovine TB in badger setts. That work will continue, as will the rolling out of the gamma interferon test, which is an important adjunct to, not a replacement for, the skin test.

Eric Martlew: I am grateful to the Minister for announcing that there will be pre-movement testing. I am sure that he is aware that bovine TB was introduced into Cumbria, following the restocking from the west country after the foot and mouth outbreak, because there was no such testing. It is over 10 years since I asked what progress was being made on a vaccine for bovine TB. There seems to have been no progress. Is that because of a lack of resources or a lack of will?

Ben Bradshaw: It is neither of those things. We announced field trials for vaccines for badgers back in the summer and there is more work to be done to progress the field trials to cattle, too. However much money one throws at such difficult scientific, medical and veterinary issues, I am afraid that one cannot hurry the science. Scientific research on the development of an effective vaccine cannot be speeded up—it takes time. That challenge is faced by not only this country, but other countries that suffer similar TB problems.

Colin Breed: I welcome the statement. I think that we can wait another 12 weeks given that we have waited several years for Government action to address what we all accept is a crisis in the countryside regarding bovine TB.
	The Minister is apparently ruling out any chance of DEFRA being involved in any control measures for badgers and is leaving it all to the farmers. I suspect that he will tell us that that is because of cost, but if the action was successful, compensation payments would reduce, which would cover some of the cost of any control measures implemented by DEFRA itself. How will he ensure that such control measures are effective if all farmers in a specific area do not propose to participate? Does he perceive that farmers who undertake such control measures might be threatened or intimidated? What is the current state of the Krebs trials? Are they just continuing, or will the results be available before the implementation of any measures that he might introduce after the consultation process?
	I support the contention that pre-movement tests will result in pretty significant costs, especially for small farmers. At the minimum, could there be a transitional period so that they would not have to meet the full force of those costs straight away? On the tabulated valuations, I am sure that there will be disputes about the value of specific cattle because of their pedigree and so on. Does the Minister intend to have at least an appeal system so that farmers are not just told, "Sorry, that's what your valuation is."? We need a mechanism whereby farmers can challenge the valuation of compensation.

Ben Bradshaw: DEFRA is not ruling anything in or anything out, but if the hon. Gentleman reads the document that we have published today, he will note that we suggest three different scenarios for consultation. He is right that none of them gives the state a role in any culling process. It would be carried out by farmers not only for the reason of cost that he suggests, but because of practicality, as well as the capacity of the Government to deliver. Farmers and farming bodies have understood that during conversations that other Ministers and I have held with them. There is a general desire that farmers should have ownership of any policy that is pursued.
	On effectiveness and farmer compliance, the hon. Gentleman put his finger on one of the real question marks over how effective a culling policy could be if compliance was not high. The Krebs trials that reported last night showed that the more edges there are, the greater the edge effect. It is better, if possible, to have coherent areas in which culling is intensive and widespread. It is a problem if farmers and landowners in such areas do not want culling to take place on their land because there is no way in which the Government would compel them to cull.
	The discussions that we have had with farmers and the industry show that they do not envisage that threats to farmers would be a major problem. On the contrary, they rather think that the scheme would be more effective if it were run by farmers because local farmers could get together to organise any possible cull.
	The Krebs trials have not finished yet. Although the culling has finished—the last culling took place about two weeks ago—the independent science group is still evaluating the latest figures. As the group has indicated, we expect that the latest figures will show more benefit than the earlier ones because, as I said, the evidence suggests that the longer repeated culling goes on, the greater the reduction of bovine TB. The data will be provided as they come through during the consultation and, no doubt, afterwards.
	On pre-movement testing and costs, I remind the House that the costs to the taxpayer at present are more than £90 million a year. I hope that there is cross-party support for the idea that the taxpayer should not shoulder all the costs and that they should be shared if the Government are doing something that we think will help farmers. In respect of the hon. Gentleman's question about valuations, there is no appeal.

David Taylor: Like most Members with rural or part-rural seats, I have regular discussions with my local branch of the National Farmers Union. I am sure that the NFU will welcome the statement made today, as there is a serious risk of the loss of farmer co-operation, which is so essential if we are to eradicate the disease. I seek the Minister's reassurance on a point made recently to me by the NFU. Is not there at least a theoretical risk to human health? That is starting to concern the NFU, the rural community and all food consumers—all of us in the United Kingdom, in fact—so could my hon. Friend reassure us in that regard?

Ben Bradshaw: I am grateful to my hon. Friend for his support for today's announcement. He is right: bovine TB is probably our most serious animal health problem. It is devastating for the farmers whom it affects; it is extremely distressing for a farmer to lose some, or in some cases all, of their cattle. It is also a serious health and welfare issue for badgers, but as my hon. Friend rightly says there are potential human health risks—they are not even theoretical—if we do not get the disease under control.

Michael Jack: Paragraph 58 of the Minister's consultation document on culling states:
	"The scientific evidence shows that intensive culling of badgers over large areas can be effective in helping to prevent the spread of bovine TB",
	yet paragraph 59 states:
	"On the other hand, the scientific data is not available to reliably quantify the beneficial effect."
	Given those conflicting statements, will the Minister spell out to the House, against the background of a Department that relies on sound science for its decision-making process, what criteria he will deploy to make the decision at the end of his 12-week consultation period?

Ben Bradshaw: I refer the right hon. Gentleman to the executive summary. The criteria—this is nothing new—would be that culling was supported by the best available science, and he is right to highlight the fact that there is still a degree of uncertainty about the science. It would have to be successful; we would have to be convinced or satisfied that what we did would be effective, cost-effective, practicable and sustainable.

Paddy Tipping: This is a difficult and contentious issue where it is important to make progress quickly, but is not it important to build on consensus? One point of consensus is improved farm biosecurity. Surely that is why pre- and post-movement testing is so important. Is the Minister committed to the maximum scope for pre-movement testing? When will it start and who will carry the costs?

Ben Bradshaw: Pre-movement testing will begin in February. As my hon. Friend will know it has already begun in Scotland where post-movement testing also takes place. He is right that improved biosecurity is important, although it will not solve the problem completely. One thing that the rationalisation of compensation will help to do is to create more incentive for farmers to improve their biosecurity. If we go ahead with badger culling at the end of the consultation period, we shall ensure that where badger culling is licensed, it is in return for certain standards of biosecurity.

Geoffrey Cox: Does the Minister recognise that there will be profound disappointment in the farming community that the Government have not seized the nettle and taken action? In the light of the consultation, which we understand will take three months, will the Minister guarantee that at the conclusion of that three-month period a decision to act will be taken? Will he tell us who will take the decision—the bovine advisory group, the Government or DEFRA? Will he give us those assurances now?

Ben Bradshaw: I do not accept that today's important announcement should be greeted with disappointment. No previous Government of either political colour have ever consulted on a significant badger cull in this country. I hope that he accepts and appreciates that, and takes that message back to his farmers. As for the consultation, as I said, we have brought it and the decision forward. My firm view is that the time for decision is nigh. It will be made at the end of the consultation by the Government. Of course, we will listen to the independent TB advisory group, and to the opinions expressed during the consultation. In the end, however, it will be a decision for the Government.

Stephen O'Brien: I am afraid that I must tell the Minister that my constituents will be very disappointed and that their hearts will be heavy at the thought of another three months spent waiting for yet another consultation. In the hot spot of Cheshire, which is on the front line in the spread of bovine TB, particularly around Audlem in my constituency and Market Drayton, which is the constituency of my hon. Friend the Member for North Shropshire (Mr. Paterson), may I suggest that the Minister institute a pilot scheme for culling, as he would do in any other area of Government performance, to help to demonstrate the evidence that he has to weigh up in that 12-week period? Pilot schemes have obviously helped in other areas of Government policy making, and the time is ripe for one to be used in this instance.

Ben Bradshaw: I am afraid that the hon. Gentleman reveals a lack of knowledge of bovine TB. The Irish trials took three years to achieve results, despite intensive culling using snares over wide areas. A pilot lasting a few weeks in his constituency, as he has suggested, would show absolutely nothing, and would be worse than useless. Let us have the consultation. Incidentally, he is not right that it is yet another consultation, because no such consultation has been held before. There was no consultation on a policy of badger culling under the Conservative Government, so I do not know what he is talking about.

Nicholas Winterton: The Minister stated that bovine TB was a serious problem not just for cattle and dairy farmers but for animal welfare and human health. Has he ever seen a badger with TB, and the distress and pain that it suffers before it dies? Can he give us an accurate figure for the amount of money that the problem will cost the taxpayer in compensation to farmers? It is clear to those of us who are concerned about both the dairy industry and animal welfare that culling is the only effective way to rid this country of TB, which is damaging to our dairy herds.

Ben Bradshaw: I thank the hon. Gentleman for his   question. I have certainly seen pictures, films and post-mortems of badgers with TB, which is clearly not very nice for them. It is difficult to tell whether or not a live badger has TB, although some people claim to be able to do so. I have seen badgers near my constituency in Devon wandering around during the day, which was not at all usual in my childhood but has become commonplace. As for the cost of TB, as I said earlier, last year, it cost the taxpayer more than £90 million, a good proportion of which was compensation for slaughtered cattle.

Robert Key: When the Minister considers the question of costs and the lack of an appeal, will he bear in mind the fact that farmers—usually, small farmers—perhaps with closed herds, have lost all their spirit for farming as a result of what has happened to their herds in recent years? He should not forget that we are talking about some of the poorest farmers in the country, who will now be exposed to the full cost of veterinary charges. I beg him to think of the consequences for poor, small farmers.

Ben Bradshaw: I shall certainly do so, but the hon. Gentleman will recognise that Governments have a responsibility to the taxpayer. Three independent reports have been produced, all of which show that serious overpayment has been made in a significant number of cases. In addition, a higher payment was made for bovine TB than for other cattle diseases, which is why we are introducing the change to the compensation payments.

William McCrea: While it is true that bovine TB is falling in Northern Ireland in contrast with the significant rise in other parts and regions of the United Kingdom, a wildlife cull in hot-spot areas is essential. It is not welfare-friendly to protect TB-infected wildlife, so a cull would surely be good not only for farmers but for wildlife suffering from the disease.

Ben Bradshaw: It is important to remember that this is a devolved issue, and I am sure that my colleagues responsible for agricultural issues in Northern Ireland will study the consultation documentation as closely as everyone else in the House.

Owen Paterson: It really is incredible, having spent £2 billion not curing TB with current methods, that we should have yet another consultation. To secure agreement on a method of culling, the Government must seek a derogation from the 1979 Berne convention on the conservation of European wildlife and natural habitats. Article 9 allows for derogations, but appendix IV lists a number of prohibited culling methods. How long will it take to secure a derogation, and which methods of culling will the Minister seek?

Ben Bradshaw: The hon. Gentleman is wrong. This is not yet another consultation—it is the first ever consultation. He is also wrong about the need for a derogation from the Berne convention.

Roger Williams: The Minister has already pointed out that if a badger cull is to be effective, it must be intensive and cover a sufficiently large area. May I draw a comparison with the contiguous cull policy on foot and mouth which, although distressing at the time, led to an early elimination of the disease? Will the Minister's attempts to eliminate TB be as strong as his attempts to eliminate foot and mouth?

Ben Bradshaw: I was not at the Department during the foot and mouth outbreak, but whatever we decide to do on bovine TB, it will require considerable resolve. The hon. Gentleman is right to highlight the fact that the scientific evidence appears to suggest that fiddling around with small-scale localised culling is at best ineffective and at worst probably makes things considerably worse. The stark choice that we may well face after the consultation is to do nothing or to do something quite serious.

Bill Wiggin: I regret that there will not be an appeal system, so will the Minister ensure that valuations of cattle are published and updated on his website so that people know where they stand? I think that he said that the Government will not compel a farmer to cull, so may I have a reply to my letter to the Secretary of State about the appalling bullying of my constituents in Pensax? Finally, he asked for clarification of a question that I asked earlier. If the Department for Environment, Food and Rural Affairs is paying a certain price to vets for the test, will he ensure that vets cannot charge farmers more for the same work?

Ben Bradshaw: That will be a matter between farmers and their vets, as it is a private transaction, but we hope that in time there will be more lay testers, which will reduce the cost of testing for farmers. As for compelling farmers to participate, I do not recall the connection with the constituency case that he raised, but I shall check and write to him. In the event of a badger cull going ahead, it is not realistic to expect any Government to compel landowners or farmers to cull badgers on their land. However, in some of the worst affected areas, the level of compliance will be high, and we would do what we could to encourage compliance, and I believe that farmers and farm industry representatives would try to do that as well. There should be encouragement and exhortation, but I would stop short of compulsion. Valuations will be updated regularly, and both the valuation regime and the pre-movement testing arrangements will be constantly reviewed.

Bob Spink: I welcome the statement. Unlike many of my colleagues, I do not think that it is unreasonable to conduct a 12-week consultation after six years. Compliance, however, is a major issue, and it is linked to the financial help that the Government can give small farmers on pre-movement testing. Will he address that issue?

Ben Bradshaw: No, not at this stage. We would very much like a proper system of farm insurance in this country, as most countries have, whereby farmers pay into a fund which can cover such costs. In the UK we still have a system that is based almost entirely on the taxpayer. We are trying to move away from that, so what the hon. Gentleman is recommending would be a retrograde step. I hope our announcement today shows farmers that the Government are serious about tackling TB, and I welcome the hon. Gentleman's welcome for the 12-week consultation.

Philip Hollobone: To identify better the spread of bovine TB, should the Government be doing more to encourage the analysis of badgers that fall victim to road kill?

Ben Bradshaw: I am not sure. The road-kill testing has not been incredibly helpful to us in identifying areas of high TB, or even the relationship between areas of high TB in badgers and areas of high TB in cattle. It is quite expensive and in all these matters decisions must be made about what is the most effective way of spending taxpayers' money to tackle the disease. Given the announcement that I made today, I am not sure that spending a lot more money on testing road-kill badgers for TB is the most effective way forward.

Business Statement

Theresa May: May I ask the Leader of the House to give the business for next week?

Geoff Hoon: As I previously announced, the business for next week is as follows:
	Monday 19 December—A debate on police restructuring on a motion for the Adjournment of the House.
	Tuesday 20 December—Motion on the Christmas recess Adjournment.
	The business for the week following the Christmas recess will be:
	Monday 9 January—Second Reading of the Government of Wales Bill.
	Tuesday 10 January—Second Reading of the Animal Welfare Bill.
	Wednesday 11 January—Remaining stages of the Electoral Administration Bill.
	Thursday 12 January—Motions relating to the Crossrail Bill, followed by a debate on "Security of Energy Supply" on a motion for the Adjournment of the House.
	Friday 13 January—The House will not be sitting.
	The provisional business for the week commencing 16 January will include:
	Monday 16 January—Remaining stages of the Equality Bill [Lords]
	Right hon. and hon. Members will wish to be reminded that the House will meet at 11.30 am on Tuesday 20 December.
	I should also like to inform the House that the business in Westminster Hall for 12 January and 19 January will be:
	Thursday 12 January—A debate on the report from the Constitutional Affairs Committee on "Family Justice: The Operation of the Family Courts".
	Thursday 19 January—A debate on the report from the Home Affairs Committee on antisocial behaviour.

Theresa May: I am grateful to the Leader of the House for giving the House the opportunity for a debate on the security of energy supply, which my hon. Friend the Member for Epsom and Ewell (Chris Grayling) has been requesting for some time. I trust that I will have the same degree of success with the request that I shall make to the Leader of the House today.
	Given the importance of the outcome of the Montreal talks on climate change, which is of long-term significance to us all, and the fact that there has been only limited opportunity to question Ministers through Department for Environment, Food and Rural Affairs questions because there has been no oral statement on the matter, will the Leader of the House guarantee that there will be a debate in Government time on the Montreal agreements on climate change?
	I am sure the right hon. Gentleman will not have missed the various reports of recent weeks about the problems in public services. In the health service there are many NHS trusts that are in deficit to a total of many hundreds of millions of pounds. Operations are being cancelled and people's names are being taking off waiting lists. As an example of the problem, the Shrewsbury and Telford Hospital NHS Trust will be cutting 280 jobs, crucially including those of nurses and doctors. We learn today that two thirds of our hospitals do not reach the top standards of cleanliness. In education, we heard yesterday that four out of 10 children come out of primary school without being able to read or write properly. So does the right hon. Gentleman not accept the need for a debate in Government time on the delivery of quality public services when Members can press Ministers on why, with so much extra money going to our public services, the Government are still failing to deliver the quality of services that people need?
	Of course, public services are also delivered by local councils. The Audit Commission reports today that four out of five of the top-performing local authorities are Conservative-controlled. I am sure the Leader of the House will want to join me in congratulating the best performing council in the country, Conservative-controlled Wandsworth. At the same time we are told that half of all town halls are wasting council tax payers' money, so will he ensure that there is a debate in which we can discuss how local authorities can best deliver improved public services and how they can learn from the success of Conservative councils?
	Finally, in the spirit of Christmas good will, may I say to the Leader of the House that we on the Conservative Benches stand ready to give any help and advice—[Laughter.] Wait for it—any help and advice to Labour or Liberal Democrat Members who wish to learn how to run a successful leadership election.

Geoff Hoon: The right hon. Lady referred to the season of good will to all men and, indeed, to all women. I am delighted to welcome her to her new responsibilities as shadow Leader of the House. I always enjoyed my exchanges with her predecessor and I welcome her unreservedly to her new role. No doubt our friends the sketch writers will already be working hard on their Punch and Judy comparisons.
	The Government will be delighted to engage in debate and discussion on the outstandingly successful Montreal talks on climate change. I am sure there will be many opportunities for the House to debate that remarkable success, and I am sure all Members of the House will want to pay tribute to the extremely effective negotiating position adopted successfully by my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs, who has gone straight from Montreal to Hong Kong, where no doubt she will continue the Government's record of success in international negotiations. I am delighted that in the spirit of good will and co-operation, the right hon. Lady wants to congratulate members of the Government on achieving such remarkable successes in international negotiations.
	I am sorry the right hon. Lady spoiled the sense of good will by making allegations about problems in public services. Possibly the way in which we might have a more rounded debate on the subject is to have a debate comparing the state of Britain's public services today with those in 1997, when we inherited a sorry picture. Let me go through the same list as she gave us—the appalling problems of waiting lists in the national health service, which were resolved by the present Government, and the appalling number of operations cancelled. If she checks the report, she will see that those figures are much reduced. What is remarkable about that reduction is that we are conducting many more operations and cancelling many fewer, a fact which, in the spirit of fairness at this time of year, I hope she will take into account when she next comes to the Dispatch Box.
	On cleanliness, the same report refers to the remarkable improvement in cleanliness. I pick out 1997 as a convenient date but these things have improved significantly since that time. The same is true of primary education, the quality of education and the amount of investment provided. The Government have no worries at all about the possibility of debates on public services. Every time we debate health, education, transport, policing—the whole range of public expenditure—the Government have a record of which we can be proud. I only wish that Conservative Members could come to the Dispatch Box and say the same.
	In relation to local authorities, the right hon. Lady relied on a rather narrow sample. If she looks a little more widely, she will see that there are more Labour councils improving than Conservative ones. We would all want to ensure that the information set out to the House was accurate.
	I mentioned to the House last week that I intended to visit the European Parliament in Strasbourg. Given the decision of the new Leader of the Opposition to pull his Members of the European Parliament out of the European People's party group, I am sure that Conservative Members will be delighted to hear that Alessandra Mussolini's group send their seasonal greetings to them. I hope the right hon. Lady will be receiving a Christmas card from her new potential sister party, described affectionately by a Conservative MEP, Struan Stevenson, as
	"a ragbag of fascists and outcasts."

David Hamilton: This morning, a paper reviewing the coal health compensation schemes was laid in the Library. Like many others, I welcome that report, which indicates that between £5 billion and £7 billion will potentially be paid out in compensation to miners' widows and retired miners. However, I am sure that hon. Members will be as angry as me when they read the report and find out that an estimated £1.6 billion will be paid out to solicitors. Will the Leader of the House make time available to debate that issue?

Geoff Hoon: I am grateful to my hon. Friend for raising that important issue, which affects many constituencies across the country—I represent a former coal-mining area. There have been some 580,000 claimants on the lung disease scheme and 170,000 claimants for vibration white finger. Total costs by 2011 are estimated to be approximately £7 billion, with £4.5 billion paid in compensation. We will study the report carefully, because we have learned lessons in the course of running such huge compensation schemes, and if similar arrangements are required in future, we would obviously seek to implement those lessons.

David Heath: May we have a debate on the unlikely subject of Government help to distressed citizens? [Hon. Members: "Charles Kennedy"] Is the Leader of the House aware that since the beginning of 2003, 119 million calls to so-called Government helplines have been missed? That is 126,270 missed calls a day, so about 1,000 calls have been missed since we started business questions. Given that many of those calls come from people who are distressed because the tax credit system is working so badly, can we at least get the phone system working so that those people can make a proper complaint?
	May we have a debate on the control of British airspace and airports? Yesterday, the Prime Minister said,
	"The idea that we should investigate every time that a United States Government plane flies into this country is completely absurd."—[Official Report, 14 December 2005; Vol. 440, c. 1296.]
	Many hon. Members expect the Government to know which planes from overseas powers, whether or not they are friendly, are flying into British airspace and the reason why such planes are landing at British airports.
	Finally, will the Leader of the House confirm that there will be statements following the European Council and the World Trade Organisation summit? Given that the failure of one is likely to impact on the failure of the other, until we do something effective to reduce the common agricultural policy, there will be a continuing barrier to helping developing countries through the WTO.

Geoff Hoon: I am grateful to the hon. Gentleman for raising the question of distressed citizens, which the Government will examine as a matter of urgency. Although I am not a betting man, in the spirit of my illustrious predecessor, Robin Cook, I shall draw the attention of the House to the odds on the potential Liberal Democrat leadership election: the right hon. and learned Member for North-East Fife (Sir Menzies Campbell) is the bookies' clear favourite to take over at 5:4 on; the hon. Member for Winchester (Mr. Oaten) is not generously priced at 6:4; and the hon. Member for North Southwark and Bermondsey (Simon Hughes) is 11:2. I am sorry to tell the House that despite extensive research I was unable to find a single bookmaker offering odds on the hon. Member for Somerton and Frome (Mr. Heath). In the spirit of Christmas cheer and as a lasting memorial to my predecessor, however, I am prepared to offer odds of around 100:1.
	It is important that those in difficulty, particularly at this time of the year, can register their complaints, and it is true that difficulties have occurred from time to time with the arrangements that we have put in place. However, I assure the House that those arrangements were implemented ultimately to ensure that facilities work better and that the Government have not sought deliberately to make the situation worse. Our purpose is to ensure that the system is more effective and efficient.
	I do not intend to comment beyond the excellent observations made by my right hon. Friends the Prime Minister and the Foreign Secretary in answer to the question from the leader of the Liberal party. The issues in relation to so-called rendition have been satisfactorily dealt with and set out clearly.
	The Government will carefully consider the outcomes of the European Council and the World Trade Organisation summit, and we will report as fully as possible to the House. Hon. Members know that a statement is customarily delivered following European Councils, and I see no reason why we should depart from that practice.

Lynda Waltho: Returning to council performance, will my right hon. Friend consider timetabling a debate on the accountability and responsibility of councils for leisure and recreational facilities? I have recently taken a petition of 15,000 names to No. 10 Downing street protesting against the decision by Tory-run Dudley council to close Brierley Hill swimming baths and leisure centre. The responsibility for leisure and recreational facilities is not taken fully into account in assessing council performance, because if it were, my constituents would not face this awful decision.

Geoff Hoon: My hon. Friend is right to raise that important issue for the communities of Dudley and Stourbridge. The Government set great store by the provision of sporting facilities, and swimming baths provide excellent opportunities for all members of the community to participate in exercise and entertainment. I congratulate my hon. Friend and other hon. Members on the campaign against those particular proposals and wish them every success.

Christopher Fraser: Given that British motorists pay a staggering £30 billion a year in road taxation and that Britain invests less in its roads infrastructure than the rest of Europe, will the Leader of the House consider holding an urgent debate on that subject in the new year, because constituencies such as mine suffer as result of the lack of investment, particularly in roads such as the A11, the A14 and the A47?

Geoff Hoon: The hon. Gentleman is right to highlight the important contribution made to general taxation by road users. At the same time, our significant investment in the road network is rather larger than that before 1997. We must maintain that level of investment in an environmentally sensitive and sensible way, and I am sure that my right hon. Friend the Secretary of State for Transport will take into account the hon. Gentleman's remarks.

Dennis Skinner: Will my right hon. Friend have a careful look at the representations made by my hon. Friend the Member for Midlothian (Mr. Hamilton), who referred to the projected settlement of those 580,000 claims? In recent days, the court has decided on a fast-track scheme produced partly by the miners group, which includes my hon. Friend the Member for Midlothian, to get those payments, many of which involve small sums of money, to elderly miners. The solicitors agreed to forgo their payments, but in court it has been decided that £1,800 will go to the solicitor and an average of £1,400 will go to the miner, which is a scandal. The fast-track scheme was promised on the basis of not spending a great deal of money—for example, medical tribunals are not required. I know that the Department of Trade and Industry will appeal against that judgment, which is an almighty scandal.

Geoff Hoon: I made the position clear in the answer that I gave earlier. My hon. Friend the Member for Bolsover (Mr. Skinner) puts his point with his customary conviction and clarity. We recognise the difficulties that there have been and the costs that have built up. I am not going to comment on a particular legal decision, not least while it is subject to appeal, but I entirely accept that we need to get the balance right between the amount of compensation paid and the legal costs involved.

Peter Bottomley: I hope that the Leader of the House will arrange for a debate on the Government's performance, during which it would be possible to point out that 300 constituencies have higher unemployment than they had nine months ago, and that waiting times for hearing tests in hospitals are longer in most places than they were in 1997, ranging between six months and four years.
	May I raise a non-partisan point that matters to every local authority in England? Ten days ago, the rate support grant settlement was announced, but local authorities have not had the exemplification of the changes that is usually made available two or three days later. Could they have that detailed information before the House rises? The Office of the Deputy Prime Minister's website says that it is "to follow", but resource directors need it now in order to plan their budgets.

Geoff Hoon: The public have an opportunity to debate the Government's performance every time that there is a general election. I am sorry to have to remind the hon. Gentleman that that debate took place earlier this year, when once again the public overwhelmingly concluded that the Government's performance was rather better than the potential performance that was on offer from the Opposition. As the hon. Gentleman is usually an extremely fair-minded Member of this House, I find it astonishing, if he will forgive me for saying so, that he refers to unemployment. This country went through an horrendous period of unemployment under the last Conservative Government, yet today there is virtually full employment. I hope that he will revert to his more fair-minded approach in future. I might say the same about his comments on waiting list statistics.
	The hon. Gentleman raises an important point about the detailed information that local authorities require. I shall ensure that the attention of my right hon. Friend the Deputy Prime Minister is drawn to that so that it can be made available.

Ronnie Campbell: Can we have a debate on the fire service? The Government are closing down fire stations in the townships and opening new ones way out of the townships. That is what is happening in my constituency. Only last night there was a big fire in Blyth, where unfortunately someone lost their life, and the fire engine had to be called from another town because of another fire in a factory. The Government seem to be getting away with murder by not debating this issue on the Floor of the House.

Geoff Hoon: My hon. Friend is right to raise what is obviously a very important constituency issue for him. However, let me assure him that decisions on the reorganisation of fire service provision, particularly the location of fire tenders, are taken in the interests of providing the best and most efficient service. That will not change. Indeed, the Government are investing a significant amount of money in new equipment for the fire service. It is important that that equipment is in the right place to provide maximum help to most citizens.

Peter Robinson: Yesterday, the Prime Minister said that he would look to see how much more information could be put into the public domain concerning the decision of the Director of Public Prosecutions to collapse the case of the Stormont spy ring. Will the Leader of the House indicate when we might have a statement, and will he ensure that it is made in this House at the Dispatch Box so that Members can ask questions?

Geoff Hoon: The hon. Gentleman has been assiduous in raising this issue. He raised it with me last week, he raised it with my right hon. Friend the Prime Minister yesterday, and he raises it again today. The message has not really changed. This is a matter for an independent prosecuting authority. My right hon. Friend the Prime Minister indicated that he will look hard to see what further information can be made available. That will take a little time, but I shall ensure that the information is made available to the House at an appropriate stage.

Jim Sheridan: My right hon. Friend will be aware of yesterday's statement by the Secretary of State for Defence about the future of the aircraft carrier orders. I am happy to say that that gives recognition and credit to British shipyard workers, men and women alike. Will my right hon. Friend use his good offices to encourage the successful companies, wherever possible and all things being equal, to sub-contract out work with the interests of British workers at heart by awarding contracts to British companies?

Geoff Hoon: My right hon. Friend the Defence Secretary will make a statement to the House in due course, and I am sure that he will deal with these issues in more detail. As I have had a passing acquaintance with such matters over a number of years, I can assure my hon. Friend that it is important that in the construction of those two very large ships—the largest ships that have been produced in the United Kingdom's history—the work should, wherever possible, be made available in the United Kingdom, subject of course to all the appropriate safeguards that are required. This represents an enormous opportunity for British shipyards. My right hon. Friend made his statement yesterday, and I am sure that further details will be available later today.

Greg Knight: Is the Leader of the House aware that, according to experts, up to 500 people are killed needlessly each year as a consequence of our maintaining the ridiculous ritual of putting our clocks back every autumn? Could we have a debate on the benefits of extending summertime throughout the year? If, as I suspect, the only objectors are a handful of Scots, should not they be told, "Look, you've got your own Parliament—if you don't like it, go away and give yourselves your own time zone"?

Geoff Hoon: I know that the Conservative party is finally in a phase of modernisation, but I believe that it was once known as the Conservative and Unionist party. I realise that the right hon. Gentleman's observations may somewhat reflect the rather poor performance that the Conservative party has achieved in Scotland in recent years. I suspect that were he standing here he would not make quite the same observations about the important contribution made to the United Kingdom by those from north of the border—would he, Mr. Speaker? Obviously, the whole question of the changing of clocks and alignment with other European countries is one that the Government take very seriously, as they do Scotland.

Brian Jenkins: Will my right hon. Friend find some time in the new year for a debate—possibly led by himself, as the subject covers several Government Departments—on the effects on the social cohesion of our communities of simultaneously reorganising the police service, the fire and rescue service, the ambulance service, primary care trusts, education and local government? Are we adopting the policy that some groups have of continuous revolution and reorganisation, and if so, can we consider its effects?

Geoff Hoon: I recognise that those issues cause concern locally, and I am grateful to my hon. Friend for raising the matter. I am not quite so grateful for his suggestion as to who should lead the debate, but at this time of the year I will take all the presents that I can get. The question of geographical boundaries as regards various public services is important. My hon. Friend is right to mention the various reforms that are taking place. However, the more the boundaries of different public services can be aligned, the more likely it is that we can deliver those services successfully and efficiently. I hope that he recognises that that is an important part of this Government's ambitions.

Nicholas Winterton: As the Leader of the House said, this is the season of goodwill. Will he bring a message of goodwill to the work force at BAE Systems in Woodford, part of which lies in my constituency, and arrange for a statement to be made in this House—or in the other House by Lord Drayson, the Minister for Defence Procurement—on the award of the Nimrod MRA4 project? That is long overdue, and the aircraft is much needed by the RAF. Will the Leader of the House please arrange for an early decision? If it could be done before Christmas, I would happy to buy him a drink.

Geoff Hoon: The hon. Gentleman has raised this question with me on several previous occasions, albeit in a different capacity as far as I am concerned. I can certainly arrange for a statement on defence industrial strategy to take place very soon, and I hope that he takes full advantage of that opportunity to raise this important matter.

David Taylor: The parliamentary highlight for me yesterday was not Prime Minister's questions, but—as an accountant and someone with strong Scottish antecedents—the publication of the Government expenditure and revenue in Scotland statistics for 2003–04, albeit 21 months after the event. They reveal that public expenditure per head in Scotland is almost £7,350 a year. I rejoice at the growth in the time of our Government. However, the figures are 20 per cent. higher than the average for the United Kingdom and 25 per cent. higher than the average for England, including the east midlands, which has a similar population and is also socially and economically similar to Scotland. When will the Government announce how they intend to bridge the public expenditure gap and deficit between English regions that are similar to Scotland and Scotland? Do not we deserve a debate on Barnett?

Geoff Hoon: I think I am grateful to my hon. Friend for raising the issue. He has demonstrated how accountancy is actually interesting. However, I hope that, when he considers Government distribution of funds, including north of the border, he will take account of the fact that a comparison of population is not the only important factor; geographical considerations must also be taken into account. The Government constantly review the statistics—that is why they are published—to ensure fairness and consistency throughout the country.

Michael Weir: May we have a debate on the amount of Government money that was wasted on preparing for self-invested personal pension schemes on residential property prior to the Chancellor's welcome U-turn in the Budget?

Geoff Hoon: I am delighted that financial advisers have someone who is prepared to speak on their behalf in the House. Indeed, there now appear to be two people who are willing to do that. I emphasise that decisions about ensuring proper provision for pensions are difficult. My right hon. Friend the Chancellor takes into account the overall financial consequences of the decisions and decides accordingly.

Michael Connarty: Will my right hon. Friend ask the Department of Trade and Industry to consider closely tips and the minimum wage, as mentioned in early-day motion 1132, which my hon. Friend the Member for Livingston (Mr.   Devine) and I tabled and which gathered 115 signatures from hon. Members of all parties?
	[That this House views with concern the ongoing situation whereby tips, service charges, gratuities or cover charges in the hospitality industry count towards the minimum wage if paid through the payroll; recognises that many of the two million people who work in the hospitality industry are denied the benefit of the tips which customers give under the impression that it will be paid as an additional payment to staff on top of their wages; and calls on the Government to amend Regulation 31 of the National Minimum Wage Regulations 1999 (Statutory Instrument 1999 No 584) to ensure that all tips, service charges, gratuities, or cover charges are paid to staff in addition to their minimum wage regardless of the method of payment used by the place of employment.]
	It is clearly an anomaly that we introduced the National Minimum Wage Act 1998 and then allowed regulation 31(1)(e) of the 1999 regulations to provide that tips and gratuities paid through the wage bill be counted towards the minimum wage. It is time that the matter was tackled. I asked the Prime Minister about it yesterday and he said that the Low Pay Commission would consider it. It is a matter of simple legislation to remove the appalling anomaly from people's relationship with the work force and workplace of hospitality workers. If we do that shortly, we will garner the pleasure and commendation of those in the hospitality industry.

Geoff Hoon: My hon. Friend raised that matter with my right hon. Friend the Prime Minister yesterday. My right hon. Friend undertook—I repeat the undertaking—that the Government would consider the matter carefully. I agree that it appears that there could be an improvement in the arrangements for the minimum wage in the sector that my hon. Friend mentioned. I assure him that we are considering the matter carefully.

Danny Alexander: The Leader of the House knows the importance that my constituency and businesses in the highlands and islands attach to regular and frequent flights between Gatwick and Heathrow airports and Inverness. The pathetically inadequate guidance that the Department for Transport sneaked out today does nothing to protect that. Will the Leader of the House ensure that the Secretary of State for Transport comes to the House to answer questions or to hold a debate on that important subject rather than hiding behind a written statement?

Geoff Hoon: I can also offer the services of my right hon. Friend the Secretary of State for Scotland. The co-ordination provided to Scotland by a Secretary of State who is responsible for both Scotland and transport is important. As one would expect, he takes seriously the arrangements for Scotland and communication. I am sure that he will be willing to deal with the matter when the hon. Gentleman raises it with him.

David Chaytor: In Iraq today, citizens will vote in their general election and they will not use the first-past-the-post system. In the United Kingdom, the Scottish Parliament, the Welsh Assembly and the Northern Ireland Assembly do not use the first-past-the-post system. In 2007, people who vote in local elections in Scotland will not use that system. We have the unfinished business of the reform of the House of Lords. Whatever the elected element, no one argues for the first-past-the post system. Is not it time that we had a debate in the House on the merit of the respective systems for national and local elections in England?

Geoff Hoon: My hon. Friend regularly asks me questions. It is fair to say that his scientific knowledge exceeds mine and I therefore have to make a stab at an answer. However, I feel on stronger ground on this subject, which has fascinated some hon. Members for a long time. I was once a member of a commission that examined the various arrangements that could be introduced for proportional representation and, if I had an hour or two, I could probably go through them all. However, there is a clear debate to be held about the principle. It goes on and the Government take it seriously.

Adam Afriyie: While Windsor is a relatively affluent constituency, its population is relatively elderly. The complex tax credit and benefit system causes a great deal of stress and anxiety for the elderly, the least well-off and the most vulnerable in our society. One in 10 people suffer from dyslexia or some form of learning disability and one in three will suffer from depression at some point in their lives. May we hold a debate on the tension, stress, anxiety and effect on quality of life of the tax and benefit system because it is tantamount to torture for the most vulnerable in society?

Geoff Hoon: The hon. Gentleman rightly raises an important issue in so far as it affects the elderly in our communities. Perhaps he did not do his view justice when he failed to compare the tension, stress and anxiety to which he referred with that caused by poverty, being unable to afford proper fuel through the winter and having insufficient income to provide for oneself. The Government have made a difference to each matter, whereas those who spoke for the hon. Gentleman on the Conservative Front Bench in the past opposed each change. It is therefore important, when we discuss help for the elderly, that he acknowledges the significant improvements that the Government have made in our time in office.

Bob Spink: May we have a debate on rail passenger transport to show the importance of increasing capacity on the rail lines? Perhaps in that debate we could consider the disgraceful position whereby the rolling stock removed from the c2c line has still not been returned to it. That scandal means that people in my constituency have to stand on the train for more than 40 minutes every day, which poses safety problems and is inconvenient for them.

Geoff Hoon: I am slightly surprised that the hon. Gentleman is so critical of the rail network. More miles are travelled by train today than at any time since the 1940s and more rail journeys are made than at any time since the 1960s. Our support for rail transport has been remarkably successful in improving the number of passengers who use our transport system. I hope that he will give us credit for that in future.

Mark Lancaster: The Leader of the House knows of the growing unrest throughout the country about the Government's attempt to impose their sustainable communities plan on our towns and cities. Will he consider a debate on a sensible way forward, whereby the existing population in places such as Milton Keynes can accept or reject the plan through a local referendum?

Geoff Hoon: I must have missed the growing unrest in Nottinghamshire, but I shall certainly look around for people taking to the streets in protest against these proposals. I personally have not had a single letter about the changes. I see no reason why the decisions need to be taken by local referendums. If the hon. Gentleman checks his own party policy, he will find that that practice is not particularly approved of by the Conservative and Unionist party. Nevertheless, he is clearly a spirited member of the Opposition who is not in any way bound by party policy. There will be clear consultation on the proposals, and I am sure that he will have the opportunity to make the views of his constituents known.

Andrew MacKay: Returning to the season of good will, we must all try our level best to help and advise those in difficulties. Does the Leader of the House agree that it would be a good idea to have an early debate on decapitation? On the Conservative Benches, my right hon. Friends the Members for Maidenhead (Mrs. May), for West Dorset (Mr. Letwin) and for Haltemprice and Howden (David Davis) could give some excellent advice to the leader of the Liberal Democrat party when he is under attack from the Liberal Democrats.

Geoff Hoon: I was waiting for the punch line, and I am grateful to the right hon. Gentleman for finally delivering it. I said earlier that this is a matter for the Liberal Democrat party, but this is the season of good will and I hope that that is extended to its leader.

Andrew Tyrie: A few moments ago, the hon. Member for Somerton and Frome (Mr. Heath) asked whether we could have a debate on extraordinary rendition. What we got from the Leader of the House was astonishing complacency. He said that all the questions on that matter had been satisfactorily dealt with. What we are talking about is people being kidnapped around the world and transported to countries that practise torture. Some of those people have subsequently been released, and they have described the horrific torture to which they have been subjected. Condoleezza Rice's assurances on this matter have been shown to be completely hollow by the legal community in the UK. The Foreign Secretary has given assurances that he has been looking at records and cannot find anything. Of course he cannot find anything; the Home Secretary told me in answer to a parliamentary question that records are not kept once a transit has been completed. No wonder there are no records; they are not kept. Surely it is time for the Leader of the House to find Government time for a debate on this issue, on which there is now widespread public disquiet.

Geoff Hoon: I have made it clear, and I repeat, that the Government have set out their position and the United States Secretary of State has set out the position of the United States Administration. The hon. Gentleman should accept those indications as a recognition of the very detailed research that has been undertaken both here and in the United States. He should also accept that neither the United States Government nor this Government accept the idea that people should be transported around the world to be tortured. I hope that he will think again and withdraw that allegation.

Defence Industrial Strategy

John Reid: With permission, Madam Deputy Speaker, I should like to make a statement about the defence industrial strategy, which I am publishing today and which has been laid before the House.
	The men and women of our armed forces play a vital role as a force for good in the world. I know that the whole House—and every complexion of party in the House—is very proud of the work that they do, in dangerous and demanding circumstances, whether in Iraq, Afghanistan, the Balkans or closer to home. We recognise that three elements are required for them to be the best in the world: the intellectual element, involving training, planning and doctrine; the physical element; and the element of morale. All those elements are important. Our armed forces can be this effective only if the Ministry of Defence and industry work as a team to provide them with the best possible tools to do the job, particularly in regard to the second element, the physical component of our fighting power, which involves equipment and capability.
	The defence industrial strategy, which we released today, is the product of five months of concerted effort by Ministry of Defence civil servants, the armed forces, other Government Departments, industry and the trade unions. It has at its heart the provision of effective and capable equipment to our armed forces. On a personal note, I should like to pay tribute to Lord Drayson, who has overseen the production of this substantial document.
	The House will know that we are in the middle of a substantial transformation, enabled by the sustained growth in the defence budget that has been a feature of each of the spending reviews that have been conducted since the Government came to power. We are procuring a series of major new platforms, including future aircraft carriers—on which I made a written statement to the House yesterday—Type 45 destroyers, new medium-weight armoured fighting vehicles, the A400M, the Typhoon and the joint combat aircraft, among others. This transformation has at its heart the delivery of truly network-enabled capabilities, linking sensors, decision-makers and shooters in a much more integrated way.
	We expect these platforms to have very long service lives. The future business for the defence industry in many sectors will therefore be in supporting and upgrading the platforms throughout what we believe will be their long service lives, rapidly and incrementally inserting technology to meet emerging threats, fulfilling new requirements and responding to innovative opportunities. That is what we expect of a large section of industrial effort, rather than immediately moving to the design and manufacture of the next generation.
	This will require rationalisation within the defence industry, particularly of over-capacity in production facilities. In some cases, sustaining the skills, technologies and industrial capabilities that we need will be challenging. Change is sometimes challenging and painful, but the one thing that would be much more painful than not changing in a changing world would be to refuse to change, and to find that redundancy and irrelevance had overtaken the product. While we may look overseas to meet some requirements, we will need to ensure that we in this country maintain military freedom of action and safeguard our national security. This degree of change and transformation—and the respect for future planning capabilities and the maintenance of our strategic safeguards—implies the   need for a comprehensive strategy for how we engage with the industrial base.
	The defence industrial strategy, building on the 2002 defence industrial policy, articulates a strategic view of our defence requirements going forward by sector, and the principles that will underpin procurement and industrial decisions in the future. It communicates for the first time to industry and the City those skills, technologies and industrial capabilities that are assessed as being required onshore in the UK in order to sustain the armed forces' ability to operate with an appropriate level of sovereignty. It recognises that this will be possible only if we have a healthy, profitable and internationally competitive industry capable of responding to our requirements.
	The defence industrial strategy also investigates how we might with industry address mismatches between planned activity and the work required to sustain desired capabilities. It will give industry and investors a much clearer idea of our priorities, allowing them to plan more assuredly for the future, which will be of benefit to the management, shareholders and workers in industry.
	I now turn to the impact of the analysis that we have conducted on specific sectors of the defence industry. In the maritime sector, the Government are investing in the biggest naval shipbuilding programme that the Royal Navy has seen for two generations. The highly capable expeditionary fleet that will result will offer significantly enhanced military capability, well suited to the demands of the 21st century.
	However, we need to recognise that the industry is currently fragmented—different companies and facilities undertake submarine build, surface ship build and support, even though the skills required often cross over. We must also face the fact that current levels of work, although huge by comparison with the recent past, will not last for ever. Once we are over the hump of the major reinvestment in new ships in about 10 years' time—that is how far ahead we are looking at the shortest end of our horizon—it will not be affordable to sustain excess industrial capacity in the longer term. That means making plans now so that we can keep the required key skills onshore in the UK.
	For submarines, we are committed to maintaining onshore the ability to design, manufacture and support through life all aspects of that capability, which is so important to our national security. Cost growth in the area, however, is a real and persistent problem. We must control cost. To improve productivity, a new structure is required.
	As my announcement on the future carrier in a written statement to the House yesterday demonstrates, we need to sustain the ability to design and integrate complex surface ships and to support and maintain them through life. A stable and healthy programme of warships and other complex vessels will continue to be built in the UK, and that will maintain and grow the high-end skills that we need. However, we might look to outsource some lower-end manufacturing offshore. That makes sense, not least in order to avoid the boom-and-bust cycle of sustaining or creating capacity for which there is no medium or long-term demand. That is also a much better arrangement for employees, providing the basis for more security and stability to develop and enhance their skills in long-term structured and secure employment.
	In the air sector, the Royal Air Force is in the middle of a substantial re-equipment programme, introducing into service the Eurofighter Typhoon and looking forward to the arrival in the next decade of the joint strike fighter. Both those aircraft will last for at least 30 years. Our current plans do not, therefore, envisage the UK needing to design and build a future generation of manned fast jet aircraft beyond the current projects—that is some 30 years away.
	That has unavoidable consequences, in forward planning, for the medium-term shape of the aerospace industry. We need to retain, however, the high-end aerospace engineering and design capability required to support, maintain, operate and upgrade Typhoon and the joint strike fighter through life, so that they are capable of tackling new challenges as they come along and incorporating new technology and improvements to meet those challenges. That is key to operating our aircraft in the manner that we would choose.
	The aerospace industry has a critical role to play, and there will be substantial business opportunities for BAE Systems and other companies such as Rolls Royce and SELEX. I am pleased to announce that we have reached an agreement with Rolls Royce to provide future through-life support to the RB199 engine on the RAF's Tornado aircraft.
	As the focus shifts from designing and building new manned aircraft towards supporting them through life, industry will have to make that challenging transformation. We are, however, committed—this is enshrined in the defence industrial strategy—to working with industry to manage that transformation with foresight to our mutual advantage. To that end, we intend to enter into negotiations with BAE Systems in the new year with a view to agreeing how best to work together—and with the many other key suppliers in the sector—to ensure that the key skills and capabilities that we need are sustained in a cost-effective manner. That work will be complex and arduous and will necessarily take time. It is essential, however, if we are to maintain stability in a period of transformation.
	This is an exciting, high technology industry with a healthy future. I am delighted to announce that we will invest in a significant technology demonstration programme for uninhabited combat aerial vehicles. That will help us to better understand the potential military benefits of uninhabited aerial vehicles—sometimes referred to as unmanned aerial vehicles, I have been instructed to say—including combat versions.

Julian Lewis: Unpersoned.

John Reid: From a sedentary position, the hon. Member for New Forest, East (Dr. Lewis) says "unpersoned". I think that everyone knows that we are talking about the development of what was previously referred to as a drone—no offence is meant to anyone in the Chamber. [Laughter.]
	That is a serious investment in unmanned aerial vehicles, which is vital for the future, and it is also essential in assisting the sustainability of the required capabilities to support our new manned aircraft. Again, that involves a period of fairly dramatic transformation, and clarity and forward ability to manage that transition will maximise benefits to industry, the armed forces and, I hope, the taxpayer.
	The armoured fighting vehicle fleet remains key to our land forces. Therefore, we must retain a capability to maintain and upgrade both our current and future equipment. We intend to work with BAE Systems Land Systems—the supplier of 95 per cent. of our current inventory—through a partnering agreement that will incentivise it as the systems engineer for the current fleet, contracting for capability provision, and bring advanced land systems technology into the UK. I am pleased to announce the signature today of an agreement articulating the principles under which such partnering will be taken forward.
	Looking to the future, we need industry to develop the complex system of systems that will make up the future rapid effect system—FRES. The most likely solution will be a team in which national and international companies co-operate to deliver the FRES platforms, led by a systems integrator based in the UK.
	A high concentration of knowledge relating to the existing fleet, but a healthy international competitive environment, also characterises the helicopter industry. As was announced last spring, we are working with AgustaWestland to promote a more open, predictable but demanding partnered relationship, providing better value for money while reducing the company's reliance on our investment to sustain the design engineering skill base. We are also undertaking a detailed capability and value for money assessment of the AgustaWestland future Lynx product, in relation to meeting both our battlefield reconnaissance and surface combatant maritime helicopter requirements. As we have long made clear, however, we will continue to look to the vibrant and competitive global marketplace to satisfy our future helicopter requirements.
	The Government have made a major investment over the past 10 years—through such projects as Storm Shadow and Brimstone—in guided weapons. We attach considerable importance to sustaining capabilities for the design of new weapons, including upgrades, and support through life. However, the scale of our investment in that area, which has been massive in the recent past, is likely to reduce by 40 per cent. over the next five years. That is likely to lead to overcapacity and an inevitable requirement for rationalisation. That might require us to temper international competition in the short term. We will need to consider whether there are approaches that we might take, together with our allies, to maintain critical skills while continuing to show a welcoming face to those other companies that have established a UK presence in this field.
	In the general munitions sector we regard assured access to ammunition as vital, but that is not to say that each and every component needs to be sourced onshore. Eighty per cent. of our requirements are currently met through a long-term partnering agreement with BAE Systems, the remainder being supplied via competition from a range of suppliers both in the UK and elsewhere.
	The command, control, communications, intelligence, reconnaissance, counter-terrorism and chemical, biological and radiological protection sectors—all of which are covered in the defence industrial strategy—are growing markets both here and in the United States. That reflects the growing importance of network-enabled capabilities, as well as the sad reality of the terrorist threat that we face. The UK has a number of very successful, highly innovative companies operating in these areas, whose profitability and dynamism are manifest. We intend to continue to look to the market to sustain our requirements.
	Value for money remains the bedrock of our commercial policy. Competition will remain a major element of that, but it will not be used when other tools, such as partnering, would deliver a better outcome, or where it would impinge on our operational sovereignty. The defence industrial strategy does not signal a move in the direction of protectionism. The UK operates the most open defence market in the world, and is at the heart of efforts to encourage other nations, in Europe and further afield, to follow suit.
	This is a challenging agenda, requiring real change in the shape of the industrial base. That change will be required in industry, but also in our own practice, and it must involve our sharpness as custodians of taxpayers' money. All that will not be without pain, but only if we collectively face up to the need for change will we be able to provide our servicemen and women with the equipment that they deserve.
	Delivering the defence industrial strategy will require sustained effort on both sides, and real leadership on both sides as well. Lord Drayson—who has done so much to produce the strategy—and I are determined to provide that over the coming months, and we look to industry to respond in like fashion. The rewards on offer are substantial. Sustaining the key technologies and capabilities required to maintain the operational edge of our armed forces and preserve national security is first and foremost in our thoughts. We also expect to enhance value for money for the taxpayer through improved acquisition performance, and to achieve better returns, health and sustainability for industry in return for such improved performance. For the nation as a whole, we mean to sustain a high-value, innovative and technology-driven industry that will provide quality skills and quality jobs for the future.
	On that basis, I commend the defence industrial strategy to the House.

Liam Fox: I am grateful to the Secretary of State for his statement, and for making copies available to the Opposition in advance. As he will appreciate, however, it was a long statement and the document is extremely complex. The House might benefit from more time in which to consider the implications, and from a longer debate at some stage.
	The document has been much trailed. It contains a number of points that we welcome, and many that we have called on the Government to adopt in recent years. We welcome the new tone of partnership between Government and industry. More than a year ago we called for
	"a mature partnership with industry, with both sides working together from a project's inception through to the completion of its service life." —[Official Report, 4 November 2004; Vol. 426, c. 488.]
	If Ministers have genuinely embraced the idea, the House should welcome that. We also welcome the identification of key capabilities that Ministers consider it essential to retain in the interests of our national sovereignty, although we shall have to study some of the detail.
	The Treasury, however, holds the key to much of what is in the document. Has the Treasury agreed to fund the defence industrial strategy fully in the 2007 comprehensive spending review, and what discussions has the Secretary of State had with the Chancellor to that end? If the defence budget is squeezed in the spending round, the document becomes simply a wish list. Implementation is everything.
	Has the Treasury made an assessment of the effect of spending on defence-related research and development and equipment on Britain's overall economic competitiveness, and will the Secretary of State make such information available to the House? Where onshore capability is maintained for reasons of strategic assurance, it is vital that value for money is guaranteed, especially when sole sourcing is involved. What measures will be established to ensure that, when the economic forces of competition are absent, taxpayers' money is best protected?
	I have a number of specific sectoral questions. The document states:
	"In a change to the stated Defence Industrial Policy, there is no absolute sovereign requirement to construct all our warship hulls on shore".
	Does the Secretary of State expect to buy hulls from abroad? What assessment have the Government made of the impact on the shipbuilding industry and employment therein?
	Individual helicopter programmes have been amalgamated in the overarching future rotorcraft capability process, and the overall budgets have been reduced by £1.4 billion on the basis that the Financial Reporting Council will identify synergies and savings. I think we have all heard that from Departments in the past. The most pressing requirements identified by recent reports from the National Audit Office and the Public Accounts Committee are caused by shortfalls in the helicopter lift capability that is essential to our activity in Iraq, Afghanistan and elsewhere. However, more than two thirds of the £3 billion FRC budget is about to be spent on two programmes, the Merlin Mk1 upgrade and Future Lynx programmes, most of which are unrelated to those requirements. Furthermore, £1.2 billion is scheduled to be spent on purchasing, without competition, 80 Future Lynx helicopters for the Army and Navy.
	An Army purchase is required to spread the non-recurring costs, but it is unlikely that such a route would have been followed if operational requirements had been the main driver. That approach seems to be at odds with the avowed aim of the strategy to put the cost-effective acquisition of capability at centre stage. Perhaps the Secretary of State will deal with the apparent discrepancy.
	The future aircraft carrier project was unveiled in the strategic defence review in 1998, with the first carrier due to enter service 14 years later in 2012. More than seven years down the line, we still have no firm order placed and no in-service date declared. Yesterday we had what is now described as a two-stage incremental approach to main gate. We will have another long wait before costs and timings are revealed.
	Will the Secretary of State confirm that both carriers will miss what the Government used to say were the target in-service dates of 2012 and 2015? Is it not true that the industry expects no first carrier before 2014, and no second carrier before 2016 at the earliest? Where does that leave the existing fleet of three small carriers, one of which has been paid off prematurely while the other two are due for disposal well before the likely in-service dates of their successors? Above all, where does it leave the capability of the Royal Navy, which has already sacrificed so many of its other warships for the sake of the promised future carriers?
	The statement made a passing reference to maintaining onshore the ability to design and build submarines, but no mention was made of the all-important issue of replacing the Trident fleet. Making the decision about embracing Trident is a step that the Government embrace about as much as Dracula would embrace a crucifix. Building a new fleet of missile submarines will have a massive impact on our defence industrial plans, and the time scale cannot be less than 12 to 15 years. That is why the Government pledged in the last Parliament to make the decision in this one.
	Will the Government now face up to what is a vital issue? Why is the Secretary of State so afraid to do so? Of whom or of which is he more scared, the Chancellor, the Prime Minister in waiting, or the dissent of many of his Back Benchers? When will he begin in earnest the debate about the future of the nuclear deterrent on which people on both sides of the argument are willing, indeed eager, to begin?
	Let me assure him in one respect. If the Government take the right decision, they will be able to count on the support of the Conservatives to ensure that the country remains protected indefinitely against nuclear blackmail. The generosity of the Opposition to the Government at this time is unbounded.
	Overall, this may be a rather pessimistic strategy document. The argument seems to be that when the current tranche of orders is completed, surplus capacity will have to be dealt with. I wonder what assumptions are made in this assessment of the outlook for British defence exports and what measures the Government could put in place to ensure that some of the surplus capacity is used to expand our defence exports overseas, especially in the aerospace industry.
	At first glance, there are a number of positive elements in the strategy document, but there are also a number of anxieties that will be felt across the country. The Secretary of State may be able to address some of them, but the Chancellor remains the key to preventing it from being a strategy of defence industrial decline. Sovereignty comes at a price; will the Chancellor and the Government be willing to pay it?

John Reid: There are obviously some elements of the hon. Gentleman's contribution that I greatly welcome. I think that the document is important and I have no doubt that we will return to it in the course of our debates. Perhaps, as it is a substantial document, we could chat through the usual channels about how best to handle that.
	Secondly, I believe that we should try to achieve as much consensus as possible in respect of the document. I have always taken that view on defence as a whole. Issues of national security should, as far as possible, be resolved on a non-party basis. That is not easy and it does not mean the absence of criticism, but the consensual approach should be welcomed.
	I note that the hon. Gentleman offers me the opportunity of going, as they would say in East Kilbride, "mob-handed" to meet the Chancellor with the Conservative party behind me. If I do not immediately accept his offer, I am sure that he will understand why. My old friend the Chancellor has overseen and watched from a distance. If the hon. Gentleman looks at the foreword to the document, he will see that one of the three faces pictured at the top is that of the Chief Secretary to the Treasury—and he is smiling. It can also be seen that the word "no" does not appear anywhere under his signature. As far as I can make out, that is a first.
	I can assure the hon. Gentleman that there has been a great deal of cross-Government participation. That is why, sitting alongside me on the Front Bench, is the Minister for Industry and the Regions, my right hon. Friend the Member for Cardiff, South and Penarth (Alun Michael) and—a little further down, but close to us in spirit—my right hon. Friend the Paymaster General, who is also smiling. Clearly, the Government have adopted a united approach on this matter.
	More seriously, the hon. Gentleman asked me whether the Chancellor has settled with me on the next three spending rounds. Of course he has not settled all that with me. We should remember that the rounds stretch through to 2015 and beyond, and it is obvious that no responsible Government would make commitments that far in advance. Over the past few years, there has been a real increase in defence spending which, as I am sure that the hon. Gentleman would in all fairness admit, was not always the case under the last Conservative Government. In fact, that period saw a 29 per cent. cut in real terms in defence spending. There is a great deal of unity on the part of the Government and I am glad that there is a great deal of consensus on the general direction of where we are going with our defence industrial strategy.
	It is a detailed publication and it is divided into three parts. The first provides a strategic overview; the second an analysis of specific sectors; and the third deals with implementation and how we have achieved implementation thus far. On maritime, the hon. Gentleman was good enough to read out the section that said that there would be no blanket requirement for hulls to be built onshore, but he unfortunately missed out the next part of the sentence, which says that there is a need to maintain a sustainable work load for a viable restructured industry in this country.
	Yesterday's announcement that 60 per cent. of the work on the two biggest craft—at 60,000 tonnes—ever to be built by the Navy will be allocated to British shipyards demonstrates clearly that we are trying to maintain a sustainable level of employment and skills, particularly at the high-end sector of the technological development of shipbuilding and refurbishment. We are seeking long-term clarity and attempting to introduce ships at what might be called a regular drumbeat in order to assist the maintenance of skills. If we need a peak capacity at the lower end of production—the sort of craft that would not traditionally be regarded as warships—we reserve the right to go offshore, but yesterday's announcement clearly shows that we intend to maintain a sustainable work load for a viable restructured industry.
	The hon. Gentleman asked several detailed questions about aircraft carriers and in-service dates, but he appears to have missed something important from yesterday's announcement. By innovatively involving the companies that are to produce the new carriers—British Aerospace and the rest of the alliance—in the maintenance, updating and refitting of the existing aircraft carriers, we have effectively ensured continuity of capability. That is why the First Sea Lord, the Chief of the Naval Staff, said that yesterday's announcement was the best Christmas present that the Navy could have been given.
	On Trident, I have little to add to what I have already said. It is a very important discussion, but we want to take time to reflect on it. With all due respect to the hon. Gentleman, we have clearly said, first, that we will retain the nuclear deterrent. We said that unambiguously six months ago in our manifesto. Secondly, the basis of retention is the assumption that, as long as potential enemies have nuclear weapons, we will retain them. Thirdly, we are not discussing whether to retain Trident, but whether in 15 to 20 years' time we will need something to continue the nuclear deterrent. We have a little more time, therefore, to challenge ourselves and each other on the assumptions and practicalities of the issue. There is no need to take a peremptory decision on that in order to meet the time scale for the defence industrial strategy.

John Spellar: The Secretary of State said that the UK operates the most open defence market in the world and mentioned efforts to encourage other nations in Europe and further afield to follow suit. No doubt he is often disappointed at their failure in that respect, so to what extent can he frame our policy to ensure reciprocation from others?
	Will my right hon. Friend join me in paying tribute to the defence industry, companies, the work force and, indeed, the communities that have given such good service to our forces over so many years? May we have a debate on the effect of the strategy on many of those communities and its impact on our manufacturing base and the Government's wider industrial and regional policy? May we have such a debate early in the new year, so that Members from the affected constituencies can detail the effect on their constituents and attempt to ensure that we have a defence footprint throughout the country, not just in a few southern and eastern counties?

John Reid: Yes, indeed. My right hon. Friend will have noted that yesterday's carrier announcement referred not just to Portsmouth and Vosper Thorneycroft, but to Barrow-in-Furness and to Govan, in the constituency of my hon. Friend the Member for Glasgow, South-West (Mr. Davidson). There was a genuine geographical spread among the beneficiaries. Yes, I do pay tribute to the work force and its adaptability, flexibility and willingness to change right across the defence industry. What the document means, I can tell my right hon. Friend, is that we are offering a degree of transparency, information and forward thinking that should give those people a greater degree of stability and security in managing change in a fast-changing world. The trade unions—including John Wall of Amicus and various others—were involved, through the Confederation of Shipbuilding and Engineering Unions. I have written today to those MPs—in all parts of the House—with a particular interest in these sectors, saying that I or the noble Lord Drayson will meet them.
	My right hon. Friend also asked what we, probably the most open defence procurers in Europe, are doing to encourage others to follow suit. We are doing three things, the first of which is to illustrate, through the success of our defence industries, that watching the minutes sometimes loses the hours, and that, through a degree of openness and competitiveness, we can develop a healthy industry. Secondly, during our presidency of the European Union we have encouraged our European colleagues to open up a little. Through the European Defence Agency, we have just signed a code of conduct that, although voluntary at this stage, moves matters in the right direction. Thirdly, we are maintaining dialogue with, and pressure on, our friends in the United States Administration—the President, Secretary Rumsfeld and others—with some degree of success. This is proving less successful on the Hill, and we must continue to work on that.

Michael Moore: I begin by associating myself and my colleagues with the tributes that the Secretary of State paid to our armed forces. This is indeed a very significant statement that will have far-reaching consequences for United Kingdom defence and its supporting industries. As has been acknowledged, we will all need time to study the 140 pages of detail, and I would also welcome the chance of a debate early in the new year on the strategy. But we certainly support the principle of ensuring that our armed forces have appropriate equipment at the right time and at the right cost; sadly, that has not always characterised defence procurement in recent decades.
	In giving industry clearer signals about what is essential to national security, how will the Secretary of State ensure proper ongoing public scrutiny of the new partnering arrangements and any other mechanisms, so that we can be confident that we are maintaining competitiveness and value for money at the point of acquisition and throughout the project's life? Given the   ongoing problems associated with technology transfer—from the United States, for example—to which he has alluded, how will he ensure that in the non-core sectors, we do not end up being over-dependent on other countries?

John Reid: I thank the hon. Gentleman for his remarks and I hope that the opportunity for such a debate arises. A defence debate is coming up early in the new year and Members may want to make representations about the topic of that debate. I would welcome our building a cross-party consensus on this issue. In a way, I regard the defence industrial strategy as a parallel of the strategic defence review, which I had the honour to oversee in 1997–98. It constituted a thorough review of the operational capabilities, configuration and direction of our armed forces, and I hope that this strategy proves similarly effective. There will be plenty of opportunities for scrutiny by, for example, the National Audit Office and Parliament, and the right hon. Member for North-East Hampshire (Mr. Arbuthnot)—he is with us today—who presides over the Defence Committee, will doubtless take an interest in this issue and in the project itself. The difficulty lies not in that but in getting the balance right between what we open up to competition, and what we maintain here as a strategic and sovereign requirement. I welcome all contributions to the debate on that issue, because I genuinely believe that it is not a party political one.

Several hon. Members: rose—

Madam Deputy Speaker: Order. I am keen to call as many Back Benchers as possible on this statement, but I am also mindful that there is other business of the House, which must be protected. May I please make a plea for brief questions and answers?

Linda Gilroy: I congratulate my right hon. Friend on introducing this strategy, which is in the long-term interest of our defence capability and of value for money for the taxpayer. As the Member of Parliament for a naval constituency, may I ask him to recognise the important role that Plymouth workers have played in submarine and surface fleet support? Does he agree that Devonport has everything to gain from engaging positively with the plans laid out in the strategy? What will happen to the marine industrial strategy? I would welcome the early opportunity to discuss these issues with him, particularly the role of Devonport.

John Reid: The answer to the first question is yes: the contribution made by the work force to which my hon. Friend refers is substantial. The answer to the second question is also yes: Devonport has everything to gain from participating in the strategy, just as work force and company representatives have gained from participating in the strategy thus far. On the third question, I look forward to discussing the maritime strategy with her and others. I am glad that we were able to announce yesterday a further stage in the reaffirmation of the carrier, and the allocation of work to the south—to Vosper Thornycroft—as well as to Barrow-in-Furness and to places further north. Everyone has an interest in making this work: the work force, management, shareholders, certainly the Ministry of Defence—hopefully, it will sharpen its act—and the armed forces themselves.

James Arbuthnot: I am grateful to the Secretary of State for giving me advance notice of this document and I agree with him that it is very important. My Committee will examine it very closely at the beginning of the new year. Does he agree that the key issue is how we put this document into practice? We need action, rather than words. Does he further agree that, despite the strategy's welcome clarity in some areas, on one of the most important—research and technology—it leaves rather a lot unsaid? For example, it states:
	"We must develop new ways of working together . . . We need to examine how R and T might better support our acquisition process."
	Can the Secretary of State reassure me that this is not simply a case of pushing the most difficult questions off into the future? That is a very important issue.

John Reid: Yes, I can. First, I welcome the interest that the right hon. Gentleman and the Defence Committee have shown in this issue. Secondly, I entirely agree with him that this is not a document for philosophical consideration; we hope that it is intellectually rigorous, but it is a blueprint for action. Thirdly, we have spent six months on this issue since I came in as Defence Secretary and it is not unusual to find that a document on a mammoth topic such as this needs further work in certain areas, and the right hon. Gentleman has highlighted one of them. There is a lot of grit in this oyster, but we welcome discussion and contributions in order to add more flesh to the bones.

Mark Tami: I welcome the review but there has been some speculation about the air tanker project and a possible reduction in the number of aircraft to be ordered. Can my right hon. Friend enlighten us as to the review's impact on that project, and on how the discussions are going?

John Reid: I am glad to confirm that this document does not affect in any way the future direction of the tanker project. We continue to have detailed and complex discussions with financial institutions about the private finance initiative side of the project; there is no real question of the operational requirement being changed. Far from backing off this project, at the last informal meeting of our European presidency—it was held at RAF Lyneham and the central item for discussion was the tanker project—I encouraged our European allies to follow the direction that we are taking.

Robert Key: I am sure that the Secretary of State's judgment in putting his trust in respect of our chemical and biological defence into the hands of the Defence Science and Technology Laboratory at Porton Down in my constituency is entirely correct. He gave an assurance about the testing and evaluation work carried out by Qinetiq at Boscombe Down, also in my constituency, but said that he wants the European Defence Agency to consider whether we should amalgamate and rationalise some of that work across Europe. However, what about the intellectual property rights that we share with our American allies? What will their reaction be if they know that we are working with European companies, some of which are sited in a nation that is not even a full NATO member?

John Reid: Obviously, that is one of the issues that has to be dealt with. Whenever I make a statement on any aspect of defence, the hon. Gentleman always has a perfect right to comment, as his constituency seems to have an interest in almost everything defence-related. He has identified a problem that we must resolve, but I shall make one general point about the EDA. We do not regard it as an autonomous body that can order and procure on its own. If I may use the expression, we think of it more as a dating agency—a body that brings member states together to collaborate on projects that they consider worthwhile. It does not act over and above the member states, but rather brings them together.

Ian Davidson: I very much welcome this document, and take particular note of the important fact that it has been produced to time. Of course, the devil is in some of the detail, and I seek clarification from the Secretary of State about balance. On the one hand, the document states that "complex vessels" will be built in the UK, but on the other, that "lower-end" manufacturing will be outsourced. Does that apply to a certain category of vessel, or are we talking only about peaks and troughs? When might it be possible to get clarification about how the strategy will be applied to the military afloat reach and sustainability program? Finally, if representatives of the work force feel that it is appropriate, will he be willing to meet them?

John Reid: The answer to the last question is yes: I am always ready for such meetings. I met those representatives recently, as my hon. Friend knows. I am prepared to meet them again, and he can be present again, if he so wishes. He asked about balance, and I assure him that there is no categorisation according to classification. Building what we traditionally regard as major warships at the upper end of the market calls for high technology and high skills, and can be sustained only by a systemic and systematic order process. At the lower end of the market, peaks and troughs occur according to fleet requirements. We are thinking about combining the two approaches, but yesterday's allocation of work—part of which went to my hon. Friend's constituency—makes it clear that my intention is to have a shipbuilding industry that is stable and sustainable in the long term, and which maintains the highest level of skills.

Peter Viggers: This is an ambitious programme of big capital projects, but will the Secretary of State take into account the fact that there seems to be a shortage of cash for detailed implementation? The danger is that these ambitious projects will suffer as a result. There are too many stories about cannibalisation of parts, shortages, and the cancellation of operations. Will the right hon. Gentleman undertake to keep an eye on the detail as well as on the headlines?

John Reid: Yes indeed. One reason why we must get best value for money is that these projects are immensely expensive. Our goal is to have victorious armed forces, and the technological and cost demands of modern warfare are huge. Part of our job is to make sure that we impose on ourselves the rigours required to do things better and on time. My hon. Friend the Member for Glasgow, South-West (Mr. Davidson) said that the document was delivered on time, but it has also been delivered on budget—and that is a claim that I have always wanted to make on behalf of the Ministry of Defence. Being on time and on budget is what we aspire to on our own account, as well as what we demand from industry. That is precisely because we need to get better value for money.

Brian Jenkins: I welcome today's document for its openness, and I congratulate the Ministry on its value-for-money approach. A great deal of time and effort will be spent on the initial stages of the carrier programme, and the adherence to the gateway project is commendable. However, in respect of future provision, will my right hon. Friend say how much of our requirement will be purchased abroad?

John Reid: I thank my hon. Friend for his remarks about the carrier programme, and he is right about our approach. Yesterday, we allocated responsibilities for 60 per cent. of hull build and ensured a degree of continuity in capability by dovetailing the present carrier fleet with incoming vessels. We are prepared to spend £300 million, but we have made sure that all the negotiating levers will not be handed over to the carrier producers. It is very important to get right the demonstration and fine design stages, because it is there that the downstream cost is incurred.
	With respect to our openness to competition, I can tell the House that 75 per cent. of our procurement is open to competition. We are not returning to protectionism, but our plans for the remaining 25 per cent. show that we are prepared to maintain a strategic industrial base to supply our armed forces.

David Laws: On the helicopter sector, may I, as MP for Yeovil and an economic liberal, say that the Secretary of State has managed to strike the right balance between the need to secure key sectors and the need to achieve value for money for taxpayers? I congratulate him on that. Can we expect an announcement early in 2006 on the key future Lynx order, provided that it meets the value-for-money criteria? Will he assure me that he will not take any advice on the matter from Conservative Front-Bench Members?

John Reid: Well, I suppose that I should begin by saying that I am deeply, deeply grateful for the support that the hon. Gentleman has shown me, given my leading position in the Labour party. I understand that that support is not supplied comprehensively for all leaders, but I thank him for what he has said.
	As for the Lynx helicopter, we are keen to ensure that its through-life and update programmes are continued. The very important skills at AgustaWestland are essential to that, and I know that the hon. Member for Yeovil (Mr. Laws) is right to ask about that, from his perspective both as a constituency MP and as someone with an interest in the procurement of very important assets for our armed forces. He will know that the world market in helicopter production is thriving and competitive. We would be silly not to take advantage of that, as that is the context in which we find ourselves. I happen to believe that AgustaWestland is able to do very well in the world market, given its success in providing the helicopters used to convey the President of the United States. That is at least one example of Liberals supporting the US President.

Ben Wallace: My constituents who work for British Aerospace will be most disappointed to hear the Secretary of State in effect announce in his statement the end of the manufacture of manned fast jets after the Typhoon project. Even more disappointing is the fact that he said nothing about a desire to build the joint strike fighter and merely spoke about maintenance and support. Does the right hon. Gentleman agree that an absolute condition of placing the order for the joint strike fighter with the US should be that this country will do all the manufacturing and servicing of future versions of that fighter? Will he extend the buy-British approach to any future plans for unmanned aerial vehicles or drones, and ensure that such machines are built in this country?

John Reid: First, although the hon. Gentleman clearly feels that my statement is terrible for BAE Systems, the problem is that the company does not feel the same way. I believe that it will welcome the Government's defence industrial strategy. Secondly, it would be little over the top for the hon. Gentleman to tell his constituents that a dramatic crisis is looming because one of our planning assumptions is that we may go to unmanned aerial vehicles after 2040. That projection is no more than a warning about something that may happen down the line. Thirdly, we are spending in the order of £50 million on more than 200 Eurofighters, and we are also insisting that maintenance on the joint strike fighter and the updating of its technological capabilities is carried out in this country. All of that is good news. Most important for a company like BAE Systems is the fact that we are sharing with it our long-term vision of how much we shall spend within the limits of what is possible for a Government that must go through three reviews, where we will spend it and how it should invest its money and so on. That is good news for industry and I hope that the hon. Gentleman will reflect on that.

Michael Jack: May I welcome the Secretary of State's involvement of BAE Systems in my constituency—employing some 6,000 aerospace workers—in the production of this strategy and his recognition of the strategic importance of our military aerospace industry? Can he give more comfort to the House on how he may secure the final assembly and check out unit to be based at Warton to look after and construct the joint strike fighter? Does he agree that in those negotiations it will be important to demonstrate to the United States that if they do not play ball, we have an alternative way of providing a marine aircraft for the new carriers? How will he conduct those negotiations?

John Reid: For blatantly obvious reasons the right hon. Gentleman will not expect me to tell him how I intend to conduct those negotiations. His points are relevant. We have made it plain that we must have the technological capability to upgrade, as well as maintain, the joint strike fighter, which is an essential element of our future carrier and other requirements, for its through-life capability. We continue to insist that that is the case.

Michael Weir: Given the time scale, has the Secretary of State made any assessment of the likely impact of the massive cost of either upgrading or replacing Trident and other defence projects in the long term?

John Reid: No, we have not got to that. I have made several estimates, however, one of which is: what would happen to the British armed forces and industry if we were ever to get a separate Scotland? It would be absolutely disastrous.

Mark Pritchard: The Secretary of State mentioned outsourcing aeronautical engineering in pursuit of value for money. Does he agree that value for money can also be found in the public sector? If so, will he give an assurance today that those skills will be retained in the Defence College of Aeronautical Engineering in my constituency and within the public sector, so that there is a public-private partnership, not a drive towards and a doctrine of privatisation, which will see hundreds of jobs lost in my constituency?

John Reid: We live in interesting times. I saw Conservative Front Benchers curl up at those heretical words from behind them. I have no problem in identifying myself with the hon. Gentleman's sentiments. Efficiency, flexibility and productivity are not the monopoly of either the public or private sector. Therefore, we should not approach these matters dogmatically; we should take the best from both and encourage both to have the best. The hon. Gentleman will appreciate, however, that I will resist the temptation to go further and pre-empt the training review that is under way.

Peter Bone: Will the Secretary of State acknowledge the genuine concern in the RAF about the lack of equipment and the late delivery of new equipment? What is his view of the morale of the RAF following his statement?

John Reid: I suspect there has never been a time when members of the armed forces did not properly want more, quicker and better. That is part of what keeps us on our toes. As far as I am aware RAF morale is very good. They are delighted that the C-17s now supplement the Hercules, that we are developing the Eurofighter Typhoon, that we are intending to procure the new tanker aircraft—the A400M is listed as equipment that we will buy—and that the joint strike fighter will operate off the carriers. Those are all good reasons to believe that morale is good and following my statement morale may be even higher than it was a few hours ago.

Nigel Dodds: I join the Secretary of State in his warm tribute to our armed forces. As he knows, we in Northern Ireland have more reason than most to be grateful to them and proud of their courage and dedication. He mentioned the critical importance of the aerospace industry and the business opportunities that arise. He will know, too, from his previous experience, of the excellence of the Bombardier company in Belfast and the skill of its work force. Will there be a role for Bombardier and Northern Ireland in general as part of the roll out of the strategy?

John Reid: I join the hon. Gentleman in his tribute to the forces. As he knows, I was involved in trying to work in partnership with Bombardier. I certainly hope that there will be a role, not only for Thales—formerly Bombardier—but for a lot of small and medium-sized companies that are perhaps not mentioned here today when we deal with the big shipyards and companies. I hope that by allowing the big companies to plan, through systems integration and project management in the United Kingdom and by indicating to small companies the direction in which the market is likely to move, it will assist smaller companies.

Philip Hollobone: What consideration has been given in the strategy to the importance to the United Kingdom of having an independent strategic heavy lift capability?

John Reid: We have given that continual attention. I am musing on the word "independent". I am not sure what the hon. Gentleman means. Certainly I take responsibility as the person who, during the controversy about whether we should buy the C-17s, with Lord Gilbert was on the side of leasing C-17s. We believed that the operational capability of those huge aircraft overcame any objections that we should buy a less capable European alternative. We bought the C-17s and we are looking at buying more. As far as I can make out the RAF, whose morale will be flying a little higher than it was a few years ago, regards the C-17 as a great success. I forgot to mention it earlier. The independence of strategic airlift at European level is important. Some years ago it was identified as completely insufficient in the strategic defence review, so we tried to remedy that. We will continue to have a view on it.

SECTION 5 OF THE EUROPEAN COMMUNITIES (AMENDMENT) ACT 1993

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation) and Order [5 December],
	That this House takes note with approval of the Government's assessment as set out in the Pre-Budget Report 2005 for the purposes of section 5 of the European Communities (Amendment) Act 1993.—[Mr. Alan Campbell.]
	Question agreed to.

Orders of the Day
	 — 
	National Insurance Contributions Bill

Not amended in the Standing Committee, considered.

Clause 1
	 — 
	Earnings: Power to Make Provision in Consequence of Retrospective Tax Legislation: Great Britain

Eric Forth: I beg to move amendment No. 1, in page 1, line 13, after 'Treasury', insert
	', following consultation with the Commissioners for Revenue and Customs,'.

Madam Deputy Speaker: With this it will be convenient to discuss the following amendments:
	No. 14, in page 1, line 17, leave out
	'appears to the Treasury to be expedient'
	and insert 'is reasonable'.
	No. 4, in page 1, line 17, after 'Treasury', insert
	', following consultation with the Commissioner for Revenue and Customs.'.
	No. 15, in page 1, line 17, leave out 'expedient' and insert 'reasonable'.
	No. 7, in page 3, line 16, after 'Secretary of State', insert
	', following consultation with the Commissioners for Revenue and Customs,'.
	No. 17, in page 3, line 16, leave out
	'appears to the Treasury to be expedient'
	and insert 'is reasonable'.
	No. 10, in page 5, line 43, after 'Treasury', insert
	', following consultation with the Commissioners for Revenue and Customs,'.
	No. 11, in page 13, line 37, after 'Treasury', insert
	', following consultation with the Commissioner for Revenue and Customs,'.

Eric Forth: It might be appropriate to say a word or two about the context of this afternoon's business, because this is one of those Bills that sadly seems to have received all-party support to date, and that usually means very bad legislation indeed. Time and again in the House, we are confronted with that revolting political concept, consensus, which usually involves a lack of proper debate and scrutiny of the legislation. A few of us hope to put that right and give the Bill something of a proper examination in the limited time that is now available to us this afternoon. In doing so, I start with the group of amendments that you have just identified, Madam Deputy Speaker.
	It is fair to say that the thrust of the amendments covers two principal areas of consideration—one is the general concept of consultation and the other is the contradistinction of expedience and reasonableness, which we shall perhaps come to later. In framing the amendments on consultation that my hon. Friend the Member for Christchurch (Mr. Chope) and I have tabled, I underwent a rollercoaster ride in deciding finally where to end up, because the amendments suggest that the Treasury be obliged to consult the Commissioners for Revenue and Customs. I was in two minds about that, because when I looked at the genesis of the Commissioners for Revenue and Customs, I found a rather mixed picture, and it is fair to say—I should warn the House—that this is perhaps not quite so straightforward as it would seem.
	I wanted to create a vehicle, a mechanism, whereby somebody other than the Treasury can look at the very important matters that we are dealing with in the Bill—retrospection and all that goes with it—and I lit upon the commissioners as the most appropriate body. In doing so, I went to the Act that set up the commissioners and, indeed, to the explanatory notes to that Act, and I want to share them briefly with the House, so that hon. Members can judge whether my amendment is appropriate. Obviously, I will argue that, on balance, my amendment represents the way forward, but I want to attach a health warning to it.
	I refer first to paragraph 7 of the explanatory notes to the Commissioners for Revenue and Customs Act 2005, which states:
	"The Act provides that, in the exercise of their functions, the Commissioners will comply with directions of a general nature given to them by the Treasury. It provides the legislative structure within which the Commissioners have the operational discretion to organise in the most appropriate way, and to make changes over time as necessary."
	Straightaway, we have run into a possible problem in that I am arguing that we give the commissioners the opportunity to be consulted, whereas we have right there in front of us the phrase,
	"the Commissioners will comply with directions of a general nature given to them by the Treasury."
	That is my first health warning on the amendment.

Greg Knight: Is not what my right hon. Friend has just read out a lethal health warning in that, in effect, even if amendment No. 1 were accepted, the provision would have no teeth?

Eric Forth: I understand what my right hon. Friend is saying. If he will bear with me for just a short while, I shall try to balance out the argument. I thought that, in fairness to him and other hon. Members, I should make them aware of these things, as part of their judgment and that of the House on my amendment.
	I am afraid that my right hon. Friend's reservations will be perhaps strengthened by the fact that paragraph 36 of the same document says:
	"the Commissioners act on behalf of the Crown and are civil servants. This continues the arrangements for the predecessor departments, and it is intended that one of the Commissioners will be appointed by the Prime Minister to be Permanent Secretary of HMRC, and by the Treasury to be Principal Accounting Officer."
	I confess to my right hon. Friend that things are going downhill rapidly, and we must bear that in mind.
	I am happy to say that the ray of light comes somewhat later because, further on in the document—this is slightly more encouraging—paragraph 46 says:
	"The Commissioners' responsibility for the collection and management of revenue is defined in section 51(3) as meaning the same as 'care and management' in previous enactments. It thus preserves continuity of treatment for those revenues that previously were subject to a duty of care and management, as this term is familiar to the wider business, legal and tax practitioner communities".
	It then makes reference to national insurance contributions, just to tie this into the Bill and the amendments that we are considering.
	Switching back from the explanatory note to the 2005 Act itself, I shall now draw the attention of the House to section 5(1) to (4), which spells out how the commissioners will be
	"responsible for . . . the collection and management of revenue"
	and "other functions". Section 5(4) states:
	"'revenue' includes taxes, duties and national insurances contributions."
	We are on reasonably firm ground there.
	The ray of light that I have detected in the 2005 Act—this may help my right hon. Friend and other hon. Members to balance their judgment—is that section 9(1), on ancillary powers, states:
	"The Commissioners may do anything which they think—
	(a) necessary or expedient in connection with the exercise of their functions, or
	(b) incidental or conducive to the exercise of their functions."
	So we have in the 2005 Act itself the possibility that the commissioners will be able, where they see fit, to act rather more independently of the Treasury than the previous words that I mentioned would suggest.

Peter Bone: I am not convinced by the point that my right hon. Friend makes. Perhaps he could clarify. If the Government make the overarching decision on the direction of Her Majesty's Customs and Revenue, I do not understand how there can be any real discretion.

Eric Forth: My hon. Friend makes a fair point. The judgment that we must make is between the overall statutory framework in which the commissioners operate on the one hand and their more detailed management and day-to-day responsibilities on the other. What I want to go on to suggest in support of the amendment is that we can be perhaps somewhat more optimistic that, in the detailed implementation of the Bill, we should expect the commissioners to be able to exercise that rather more detached position that I suggested just a moment ago in that they may do anything that they think
	"necessary or expedient in connection with the exercise of their functions."

Christopher Chope: Has my right hon. Friend noticed the difference between what he is now reading from the text about such things being "necessary or expedient" and the wording of the Bill, which refers particularly to expediency, without any reference to necessity?

Eric Forth: I am sure that my hon. Friend would not want to hurry me on to the next part of my argument because that relates, quite properly, to some of the other amendments in the group, on which we will consider whether we prefer the words "expedient" or "reasonable", as set out in the amendment that he has tabled. I will not get to that quite yet, if he will forgive me, because we are about to get to the meat of this section of the amendments.
	We are seeking in our amendments to oblige the Treasury to consult the Commissioners for Revenue and Customs and we are faced with a straightforward and simple proposition that occurs fairly frequently when we consider Bills of this kind: are we content with what the Government are trying to tell us in the Bill? Clause 1(1) states:
	"it appears to the Treasury to be appropriate to make regulations under a relevant power for the purpose of reflecting the whole or part of the provision made by the retrospective tax provision."
	We see the phrase, "it appears to the Treasury", full stop. That is what the Government want us to accept. In other words, they are saying "Trust us. We are the Treasury; we are the Government, so it will all be okay." That would be bad enough in any normal circumstances, but we are talking about retrospective tax provision and we are asked to be doubly trusting of the Government and the Treasury's ability to implement a retrospective provision. That, of course, is the theme of the Bill.
	I hope that, on Third Reading, we might have an opportunity to reconsider the principle of retrospection, with which I feel as uneasy now as I did when I first had the honour of coming to the House in 1983. Sadly, I recall being told by much wiser and more senior people than I was at the time—although I am now very wise and very senior, as you know, Madam Deputy Speaker—back in 1983 that retrospection was completely out of the question given the traditions of the House, the terms of our unwritten constitution and Magna Carta and all that.

Dawn Primarolo: While the right hon. Gentleman is setting out his views on retrospection, will he explain why he voted with the Conservative Government on a Finance Bill that introduced a retrospective tax arrangement? He did not seem to have such an objection then.

Eric Forth: The answer is probably shame and guilt. I slaved in the low foothills of government for some nine years, as the Minister might recall, and there were occasions on which I was less than happy with what the Government did. I am sure that she has been utterly content with everything that her Government have done during her honourable period in the Treasury, but, frankly, that is not always the case. It will not wash for her to suggest that I cannot criticise her Government now just because I voted for something as a loyal Minister in the lower levels of government because, as I said, I am now older and wiser. I am now guilt-free, and I hope that the Minister shares that condition.

Greg Knight: Has my right hon. Friend not missed a point in his reply to the Minister? The Bill introduces unspecified retrospection—that is the difference.

Eric Forth: Perhaps we will come back to that broader question later, but my right hon. Friend is right. The Bill is shot through with all sorts of broad and worrying powers with an assumption that retrospection is desirable and something for which the Treasury can reach almost at will. That is the whole point of amendment No. 1, because I wanted to find a safety net that would give us a degree of reassurance about what the Treasury might be able to do under the broad terms of the Bill's present wording. I lit upon the commissioners as being probably the best bet.
	The fact that my amendment was selected was an important first step in that direction. Hon. Members will know that it is one thing to table an amendment, but quite another for it to get through the rigorous filters and mechanisms that exist to ensure that our amendments are properly as they should be. I was encouraged—there was a skip in my step—when I read the selection list this morning and found that my amendment had got through that rigorous process. That indicates that it has real substance and that the House can thus consider it carefully and seriously.

James Duddridge: I congratulate my right hon. Friend on moving the amendment and seek his wise counsel as someone who has been involved in parliamentary matters for much longer than me. I was worried about retrospective legislation when I entered the Chamber and I am now more worried after hearing what he has said. Is this part of a broader trend? I made my maiden speech on the Consumer Credit Bill, which introduces retrospection. Is it the case that the Government are using many Bills to go back and change the rule book?

Eric Forth: I share my hon. Friend's reservations. He and I must chide our Front-Bench spokesmen a little—I do that from time to time—because we are being sucked into this modern idea of consensus. We are being asked to sign up to the idea that the more Bills and Government measures to which we agree, the more popular we will somehow be outside the House. I plead guilty to the fact that I regard the proper work of the Chamber as that which is being exemplified today. Our proper job is to assume the worst of the Government until they prove otherwise, not the reverse. We should not assume that the Government are doing—

Madam Deputy Speaker: Order. Of course the proper job of the right hon. Gentleman now is to speak to his amendment, which I am sure that he will do.

Eric Forth: I will do that with enthusiasm, Madam Deputy Speaker.
	I am asking hon. Members to judge whether they are content that the Treasury should be able to make regulations without any further mechanisms or consultation, or whether, as I suggest in the amendment, the commissioners should be able to examine the proposals, or at least be consulted about them. Although I have been open with the House about my reservations about the powers and role of the commissioners, I thought that they had sufficient substance, and that we should respect them sufficiently, to allow the Bill to be amended in the way in which I suggest.
	Let me move on to the second broad theme of the amendments. That revolves around proposed new subsection (2), which states:
	"Those regulations may be made so as to have retrospective effect if it appears to the Treasury to be expedient, in consequence of the retrospective tax provision, for the regulations to have that effect."
	Amendment No. 14, which was tabled by my hon. Friend the Member for Christchurch (Mr. Chope), would remove the word "expedient" and insert the word "reasonable".
	I have resorted to the oldest trick in the parliamentary book because given the words that we are considering, I thought that it would be appropriate to look up the word "expedient" in the dictionary. The definition was:
	"advantageous; advisable on practical rather than moral grounds . . . suitable, appropriate . . . a means of attaining an end".
	I thought that that summed up the word rather well. Straight away, we find that the Treasury is amoral, or even immoral, because according to the dictionary definition, expediency is not moral.

Greg Knight: Will my right hon. Friend tell the House in which dictionary he looked up that definition? I, too, have consulted a dictionary. The "Concise Oxford English Dictionary" gives another definition of the word "expedient" that is highly relevant to what he is saying. It defines expedient as "politic rather than just".

Eric Forth: I looked at one of the longer versions of the "Oxford", but I prefer my right hon. Friend's definition. We do not have to choose. We can look at both definitions because they seem to be moving us in the same direction. We have flushed out the Treasury and the Government easily. By using the word "expedient" in the Bill, which we wish to change through amendment No. 14, the Treasury has bared all. The Minister will have to defend herself, her Department and the Government against a charge of immorality because that lies behind the definitions of the word.
	My hon. Friend the Member for Christchurch and I would like to replace the word "expedient" with the word "reasonable", my dictionary definition of which reads:
	"having sound judgement; moderate; ready to listen to reason . . . in accordance with reason; not absurd . . . inexpensive; not extortionate".
	Could we have a better choice of terms before us in the context of the Bill?

Brooks Newmark: Although I do not wish to be pedantic about the use of language, I am still not clear why we should rely on reason, especially the reason prevailing at the Treasury, if the Department is given the right to create regulations that impose retrospective taxation. Why should we leave the reason to the Treasury because that would take us to the logical result of retrospective taxation?

Eric Forth: My hon. Friend is challenging the whole principle underlying the Bill, which I would love to do. We will, of course, have the opportunity to do that on Third Reading. We are examining in a focused way the mechanism by which retrospection would be implemented by the Treasury—after consultation with the commissioners, as I would prefer it. The Bill would allow the Treasury to make its judgment on retrospection simply on the basis of expediency. As we have discovered, no moral judgments would be allowed because the decision would be based on what was practical. That might suit the Government, but I hope that it does not suit the Opposition.

Peter Bone: I would like the words "in exceptional circumstances only" to be added to the Bill before the word "reasonable".

Eric Forth: I wish that my hon. Friend had tabled an amendment to that effect. I suspect that it might well have been selected, and he would then have been able to share the limelight with me by speaking to it. I accept what he says. Now that he mentions it, I wish that I had tabled such an amendment. Perhaps he and I can get together next time to see what we can do.
	You can see, Madam Deputy Speaker, that we are trying to introduce this concept of reasonableness, which of course has been well established over a long period. My right hon. and hon. Friends behind me who are eminent lawyers will be able to expand on that, I hope at some length, in a way that I could not possibly do. I am just trying to lay the groundwork in suggesting that expediency in this context is positively undesirable, whereas reasonableness is something that people want to see in such a measure.

James Duddridge: Will my right hon. Friend explain why the Minister has not risen to her feet to explain the difference between the two concepts, and why "expedient" will remain in the Bill rather than being replaced with "reasonable"? This "reasonable" amendment seems reasonable, and the word "expedient" should be replaced.

Eric Forth: I suspect—and, looking behind you, Madam Deputy Speaker, I can see that a piece of paper is about to wing its way to the Minister—that Ministers these days do not know the difference between expediency and reasonableness, and need their officials to tell them what it is.

Dawn Primarolo: rose—

Eric Forth: I will give way to the Minister, who rises with papers in her hands that probably came to her from her officials, and I will, of course, welcome her telling us what they say.

Dawn Primarolo: Those comments were unworthy of the right hon. Gentleman. He is entertaining the House very well this afternoon but knows full well that I will reply to the points that have been made when he and his hon. Friends have concluded their remarks, to ensure that I have heard all their points before I venture to reply. Perhaps, as he is so experienced in the House, he would like to explain that to the hon. Member for Rochford and Southend, East (James Duddridge).

Eric Forth: We seem to have touched a rather raw nerve there, Madam Deputy Speaker, do we not? The Minister will, of course, have plenty of time this afternoon. We have two or three hours to go before we are forced by the Government's wicked programming and timetabling to curtail our remarks. I look forward to hearing what the Minister has to say. Perhaps she and my hon. Friend the Member for Rochford and Southend, East can get together afterwards and have a quiet word about morality.
	I have simply tried to lay the groundwork for a short debate on these matters. I have tried briefly to outline why we should introduce the commissioners into this part of the process and why a distinction should be made between expediency and reasonableness. I very much hope that my right hon. and hon. Friends will be able to support me in this. I hope, too, that in spite of the Minister's prickliness, when she comes to reply, she will able to see the strength of our argument and, who knows, perhaps even accept one, if not both, of those amendments.

Christopher Chope: I congratulate my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) on stealing most of my thunder on the amendments in my name, Nos. 14, 15 and 17, to which I want to address some brief remarks.
	The purpose of the amendments is to introduce a degree of equity, fairness and, most importantly, objectivity that is lacking in the current wording about the power to make retrospective provisions under delegated legislation. The whole issue of retrospection is contentious and controversial, and I am sure that when we come to discuss the next group of amendments, which are designed to limit the extent of that retrospection, we will be able to look at that subject in more detail.
	In amendment No. 14, I am trying to introduce a requirement that the retrospection power could not be used unless it was reasonable to use it. I find it hard to believe that the Minister can cavil at that. Why should the Government be seeking powers to exercise retrospective legislation other than in circumstances when to do so would be reasonable?

Philip Hollobone: In looking at the amendments, I am torn between those tabled by my hon. Friend and those tabled by my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth). My hon. Friend's amendment No. 14 would leave out the words
	"appears to the Treasury to be expedient",
	whereas my right hon. Friend's amendment would leave in the word "Treasury" and insert
	"following consultation with the Commissioner for Revenue and Customs".
	I hope that during his remarks my hon. Friend will be able to advance the case for his amendment over that tabled by my right hon. Friend.

Christopher Chope: The first point is that, as a rule of thumb, my hon. Friend should be inclined to prefer what my right hon. Friend says to what I say, because I am merely one of his hon. Friends. The presumption is that the arguments of those Members of the House who are right honourable should be preferred. Nevertheless, that will not stop me trying to make my case.

Greg Knight: My hon. Friend is, if I, as a Privy Counsellor, may say so, far too self-effacing. Perhaps the answer to the point that was made is that both of the amendments have their merits.

Christopher Chope: My right hon. Friend was not Deputy Chief Whip for nothing. We can see that he has great powers of diplomacy. I am sure that he is right to suggest that there is merit in all the amendments.
	To summarise why I think that my amendment, No. 14, is important, I tell the House that it changes the test of expediency or reasonableness from one that is carried out by the Treasury to an objective test, which would make it much more justiciable. It would mean that if a measure were thought to be unreasonable, it could be challenged in the court. At the moment, the test of whether something is reasonable or expedient would be solely for the Treasury.

Eric Forth: Perhaps my hon. Friend will be able, as I was not because I wanted to leave time for my hon. Friends to contribute, to elaborate a little on the idea that expediency rests almost entirely on practicability, so the test would simply be, "Can it be done?", whereas reasonableness introduces more of a concept of fairness and, therefore, of judgment. That, surely, is the distinction that we are trying to make and that is so important to those who may well suffer from retrospection in its worst forms.

Christopher Chope: My right hon. Friend is absolutely right. He and I are saying to the House that if, as we will no doubt hear from the Government, they believe that the extreme circumstances justify the use of retrospection, we should ensure that those powers are exercised with moderation and reasonableness.

Stephen Hammond: I am sure that my hon. Friend is aware that clause 1 allows the Treasury to adjust earnings on any liabilities to national insurance contributions that have already been determined, with the result of changing the amount of contributions that are payable or even creating a new liability. Clearly, according to my hon. Friend's definition, that can be done, but the question is whether it is fair or reasonable that it should be done.

Christopher Chope: My hon. Friend, a distinguished member of the Standing Committee that considered the Bill, is right to draw attention to that point, and I hope that he will have the chance to expand on it in his own speech in due course.
	I find it hard to believe that the Minister will not accept the change proposed in amendment No. 14 so that subsection (2) would read:
	"Those regulations may be made so as to have retrospective effect if it"
	is reasonable
	"in consequence of the retrospective tax provision, for the regulations to have that effect."
	That would mean that the judge of that reasonableness would ultimately be the courts; it would not be left to the Treasury to decide whether the measure was expedient. It is hard to think of any circumstances in which the Treasury would not think it expedient to legislate in favour of getting more revenue, however just or unjust that might be. That is the big problem with the wording at present; it encourages the Treasury to say, as we often hear from the Chancellor of the Exchequer, that if something will generate revenue it is expedient and must be good, irrespective of how fair or unfair it might be.
	I have given the Minister a safety net. If she believes that the Treasury should continue to be the judge, it would, under my amendment No. 15, have to satisfy the test of reasonableness rather than of expediency. I hope that she will accept my amendment No. 14 but if she thinks that would cause great loopholes that the Treasury would not be able to close, as an alternative she could fall back on amendment No. 15, which would still give the Treasury the say, but on grounds of reasonableness rather than expediency.
	My right hon. Friends the Members for Bromley and Chislehurst and for East Yorkshire (Mr. Knight) have been consulting the dictionary. In preparation for this short debate, I resorted to "Words and Phrases Legally Defined", a useful reference for legislators. It draws attention to decided case law in the UK and the common law jurisdictions and sets out how particular phrases have been interpreted in the courts, which enables us as legislators to decide which phrases and words we want to incorporate in our own legislation.
	In a Canadian case, "Words and Phrases" refers to the "Shorter Oxford English Dictionary" definition of expedient as
	"advantageous; fit, proper, or suitable to the circumstances of the case: Useful, politic, as opposed to just or right".
	I realise that my right hon. Friend the Member for East Yorkshire was referring to the "Concise Oxford Dictionary", but with the greatest respect, I think that the "Shorter Oxford Dictionary", which is in fact longer, sets out the definition more clearly and precisely. In the case of Health Care Developers Inc. v. Newfoundland, in 1996, there is a reference to whether the terms of the Public Tender Act were wide. The conclusion is that, due to the use of the word "expedient", the Act is extremely widely drawn.
	Similarly, a reference in the "New Zealand Law Reports" to a case in 1998 notes:
	"'Expedient' is frequently used in statutes . . . While there may be shades of meaning of the word, depending on the context, reference to standard dictionaries brings out its basic meaning . . . Clearly, 'expedient' as used in the section"—
	of the New Zealand Criminal Justice Act 1985—
	"sets a lower threshold than 'necessary', a conclusion reinforced by the consideration that the legislature often employs the alternative standards of 'necessary or expedient' ".
	That is especially material, as my right hon. Friend the Member for Bromley and Chislehurst referred to the statute that set up the Customs and Excise commissioners and the powers to deal with what was "necessary or expedient". However, we notice that the words "necessary or" have been left out of the Bill. If the very commissioners are set up under arrangements that enable them to do that which is necessary or expedient, why should the Treasury be given even greater power, without the inclusion of the necessity test?

Eric Forth: That is what gives us a little ray of hope. As my hon. Friend rightly points out, in the Bill the Treasury is grabbing everything and basing it on expediency, yet the word "necessary" appears in the detailed terms for the commissioners. By including the commissioners in the process, as our amendment suggests, we are giving ourselves a little extra protection, through the word "necessary", which certainly does not exist in the Bill.

Christopher Chope: My right hon. Friend is right. That is an important point for the Minister to address when she responds to our arguments. Although we probably will not be able to have more than one vote on this group of amendments, it is open to the Minister to say that she is prepared to accept any number of our amendments, or that she will propose a collective amendment in the other place. My understanding is that as the measure is not a money Bill it will be considered in another place.
	I hope that the right hon. Lady will look carefully at our proposals. Although we know that she is a reasonable lady and a reasonable Minister, that is not in itself sufficient. We need safeguards in the statute book against a future Government or Ministers who may not be quite so reasonable. That is why we should include the reasonableness test.
	I shall not go through all the other legal precedents and definitions for expedient. The definition can be extremely wide, and if the Treasury is to decide whether something is expedient, it is hard to think of wider terminology. We would be legislating to say that the Treasury could do whatever it wanted if it thought it was expedient, and no one else would have the chance to challenge that. It is almost trite to refer to draconian laws, but even Draco would have been unable to achieve anything as all-embracing as the provisions that we want to amend.
	By contrast with the word "expediency", the word "reasonableness" has been tested in the courts on many occasions and is much better understood in our ordinary language. The Government should be prepared to accept that any of their measures should pass that test before they introduce retrospective regulation.

Eric Forth: I was not able to consider this point, but my hon. Friend may be able to come to a judgment: does he think that the word "reasonable" would survive in a European context? As so much of what we do in this place is subject to European scrutiny and judgment, does he think that any continental would remotely begin to understand "reasonable"?

Christopher Chope: I am only just beginning a close examination of the European convention on human rights, as I have recently had the privilege of being appointed by the Prime Minister a parliamentary representative at the Council of Europe, which oversees human rights in Europe.

Madam Deputy Speaker: Order. I hope that the hon. Gentleman will not be led too far astray by the right hon. Member for Bromley and Chislehurst (Mr. Forth), and will restrict his remarks to the amendment.

Christopher Chope: I shall certainly endeavour to do so, Madam Deputy Speaker, and I am sorry if my previous response suggested a certain immodesty on my part.
	In considering what is reasonable, the Europeans tend to look at human rights and reflect on whether our proposals fit in with the ECHR. We shall deal with that in more detail when we debate the next group of amendments. There is a strong argument, which has almost been conceded by Ministers, that their proposals may not fully satisfy the ECHR. That is therefore the answer to the question that my right hon. Friend the Member for Bromley and Chislehurst asked about the European interpretation of "reasonable".

James Duddridge: My hon. Friend's amendment would replace one word with another. Did he consider adding both "expedient" and "reasonable"? If his proposal is not accepted by the Secretary of State and Ministers, would that mean that they could do something unreasonable? Would the addition of both words therefore not be sensible?

Christopher Chope: Obviously, it would be better than not accepting the amendment at all but, in deference to my hon. Friend, the word "expedient" is far too broad for the Bill, which gives the Government power by regulation to introduce retrospective legislation to penalise British citizens with higher taxes, especially national insurance contributions. If my hon. Friend had tabled such an amendment, I would have been happy to address it, but I do not wish to encourage a joint test of reasonableness and expediency, as there is an inherent conflict between the two concepts. That is why I did not table such an amendment.
	"Stroud's Judicial Dictionary" says:
	"The word 'reasonable' has in law the prima facie meaning of reasonable in regard to those circumstances in which the actor, called on to act reasonably, knows or ought to know".
	That is exactly what we are trying to achieve. The Government should act reasonably in the exercise of the great powers that it seeks in the Bill. There is no reason why we should discuss all the other uses of the word "reasonable", but it is worth remembering that expressions such as "reasonable acts", "a reasonable amount", "reasonable and probable cause", "a reasonable time" and "reasonable care" are frequently included in legislation, and have been the subject of judicial decisions. If we are to introduce strong regulations that can penalise people retrospectively and if the Government act unreasonably, it should be possible to challenge such action in the courts.

Eric Forth: Although the concept of reasonableness frequently occurs in legislation sponsored by other Government Departments, it may be strange and foreign to the Treasury which, uniquely in government, lives a completely unreasonable existence. Although my hon. Friend has found other examples of such usage, they may not impress the Treasury sufficiently to persuade it to include the word in Bills such as the one that we are considering.

Christopher Chope: My right hon. Friend is right, as I have not been able to find any reference in a Treasury statute to the word "reasonableness", but I am sure that the Minister will correct me if my inquiries were insufficient.

Brooks Newmark: I may be able to help my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth). The Treasury may consider the perspective of my hon. Friend the Member for Christchurch (Mr. Chope) unreasonable. However, it may view it as reasonable, necessary and even expedient to claw back more money through the tax system. I suggest that my hon. Friend look at measure from the Treasury's perspective, which may well deem such behaviour reasonable. That, however, makes me uncomfortable with the use of the word "reasonable".

Christopher Chope: My hon. Friend appears to be criticising amendment No. 15, which would leave the test of reasonableness with the Treasury. Amendment No. 14, however, would leave the test of reasonableness to the objective observer or the courts so, even if he does not support amendment No. 15, I hope that he will support amendment No. 14 for the articulate reasons that he gave.
	So the case is made. That does not mean that nobody else needs to participate in the debate, but we already have evidence that the Government are on the back foot. They want to be seen to be reasonable, and what could be more reasonable than accepting the amendments, particularly amendment No. 14?

Greg Knight: My right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) and my hon. Friend the Member for Christchurch (Mr. Chope) have done the House a service by tabling the amendments. When I perused the amendments last night, I was more attracted to my right hon. Friend's amendment No. 2, which unfortunately has not been selected. I was unsure whether his amendment No. 1 would have any effect at all if implemented. The commissioners are not at arm's length from the Treasury. They have a similar purpose, and one struggles to think of occasions when the commissioners have stood up strongly to a Treasury view on a particular matter.
	I started out not being sympathetic to my right hon. Friend's amendment because I took the view that it was too weak to be worth the candle, but on reflecting on the matter and listening to what he said, it occurred to me that if approved by the House, it may bring some benefits in that Ministers might decide to set out guidelines to the commissioners telling them, if the power of consultation was incorporated in the Bill, that they were required to take evidence from interested third parties and listen to representations made to them. The issuing of guidelines, which is not part of my right hon. Friend's amendment but which Ministers could nevertheless do, could make his amendment worthwhile. I have been won over as the debate has progressed, because the amendment could be made to work and have some effect. So, on balance, I can say that my right hon. Friend has my support.
	I am with my hon. Friend the Member for Christchurch all the way on the amendments that he tabled. I cannot see how the Minister can justify resisting the use of the word "reasonable". A number of definitions were quoted to the House, but the essence of my hon. Friend's argument is contained in the "Concise Oxford English Dictionary" quotation that I read to my right hon. Friend the Member for Bromley and Chislehurst earlier. The "Concise Oxford English Dictionary" defines "expedient" as "advantageous" and goes on to say—this is a killing phrase—"politic rather than just". The Paymaster General is asking us to accept the use of a power that can be taken to be unjust. I wonder why she has not thus far signified that she accepts my hon. Friend's amendments.
	I suspect it is highly likely that the courts would not interfere with the use of a power where that power can be used expediently. I do not think the courts would interfere with a Minister saying, "I took that decision because I deemed it was expedient", whereas we know from a raft of court decisions that the courts eagerly give their view where the statute concerned refers to "reasonable". Using the word "expedient" in effect gives Ministers carte blanche.
	I agree with what was said earlier. I have nothing but praise for the Paymaster General, but when we are making law and examining the phraseology that we use, we must assume the worst. I am far from happy to allow a future Government of whatever political persuasion to give powers enabling a Minister to deem, on a whim, that a decision is expedient. I hope that on reflection the House will accept my hon. Friend's amendment, and I hope the Minister will accept it.

Rob Marris: First, may I apologise to the right hon. Member for Bromley and Chislehurst (Mr. Forth)? I missed the opening part of his speech when he moved his first amendment, but I think that he will accept that I got the flavour from his subsequent remarks.
	The amendments are an attempt to make mischief, which is arguably what the Opposition should do. The right hon. Gentleman has discussed his disquiet about the concept of consensus. I think that I understand where he is coming from, but the amendments involve "consultation", which is meaningless mischief making unless there is hope that consensus, compromise and agreement will be reached, so his position is contradictory.
	I congratulate the right hon. Member for Bromley and Chislehurst on his verbal sleight of hand when we got into definitions. He more or less accused my right hon. Friend the Paymaster General of siding with the forces of immorality and contrasted that with definitions of "morality" and "expediency", which he got from a dictionary. In this context, however, the converse of the moral position is not immorality but amorality, which is a point that the Opposition do not seem to grasp when they discuss morality and definitions of reasonableness. It is almost impossible to discuss reasonable taxation, which is almost an oxymoron.
	I shall provide a parallel to illustrate where I am coming from in the moral argument. Most hon. Members accept that it would not be reasonable in criminal law to carry out the death penalty on someone who had shoplifted a bar of confectionary.

Eric Forth: Presumably we can draw the conclusion that the hon. Gentleman and the Government whom he supports impose unreasonable taxation.

Rob Marris: Not at all. If the right hon. Gentleman allows me to develop my points, he will understand them in a more rounded way—he may still disagree with them and we may not achieve consensus, but he will understand them.
	Most hon. Members would regard it as unreasonable to hang a man for shoplifting a bar of confectionary, although that is a moral decision and I accept that the result might not be unanimous in this House. I sense that there are differing views in this House about what is a reasonable level of taxation and whether a tax is reasonable at all. For example, I think that a windfall tax on the profits of oil companies, which have made the market and considerably increased the price of oil in the past few months, would be reasonable, but I suspect that many Opposition Members would not think so.

Greg Knight: The hon. Gentleman is making an amusing and interesting point, but may I draw his attention to the scope of the amendment, which he has missed? The use of the word "reasonable", as my hon. Friend the Member for Christchurch seeks to apply it, does relates not to the issue of taxation per se, but to the introduction of retrospective taxation, which is an entirely different matter.

Rob Marris: It is not an entirely different matter, because we are discussing the word "reasonable" in the context of a tax regime.

Brooks Newmark: On retrospection, which has been raised by my right hon. Friend the Member for East Yorkshire (Mr. Knight), it may well be expedient for the Treasury to decide that it wants to claw in more tax revenues. As my hon. Friend the Member for Christchurch (Mr. Chope) has said, however, an independent body making an independent judgment may well say that such a decision is not reasonable, although it is expedient for the Treasury.

Rob Marris: I am grateful to the hon. Gentleman, who makes my point for me. In the light of his remarks, I urge my right hon. Friend the Minister to be very cautious about accepting the amendment. The judgment of what is reasonable in a tax regime—whether we are talking about retrospectivity, the level of a given tax or its very existence—is ultimately a political judgment, as many such things are. It is much more difficult to make that political judgment if one tries to step away from it by suggesting that in some fantasy world taxation, per se, is reasonable. Some people regard it as reasonable and some do not. Some people do not want to pay tax at all.

Brooks Newmark: Will the hon. Gentleman answer my question about the retrospectivity of taxation? It may well be expedient for the Treasury to claw in more money, but it may also be unreasonable for it to take that action. That is the point that we are making.

Rob Marris: I accept that some Members would see it as unreasonable. That is why I urged my right hon.   Friend to be cautious when considering the amendments. I prefer the word "expedient" to the word "reasonable" for the very reason that the hon. Gentleman highlights. These are political decisions; they are not, and cannot be, moral decisions.
	I say to the hon. Member for Christchurch that I cannot comment on the antipodean definition of expediency that he mentioned. However, as a citizen of Canada who lived there for nine years, I am familiar with the way in which the English language is used across Canada, which is particularly distinctive in Newfoundland. I shall try to make the difference graphic. As Members may be aware, there is a federal election going on in Canada. The Canadians call constituencies "ridings". That word means something in this country, but it has nothing to do with parliamentary constituencies. That is an example of the way in which language evolves over time. One would have to be cautious about trying to import a definition from a Canadian law case into this Chamber—and doubly cautious, as most English-speaking Canadians would agree, when it comes from a case in the province of Newfoundland and Labrador, as in that cited by the hon. Member for Christchurch. I am not sure, with due respect to him, that using that definition throws much light on our discussions in this Chamber.
	Let me focus for a minute on the question of retrospectivity, which the right hon. Member for East Yorkshire—

Greg Knight: East Riding.

Rob Marris: I thought that the East Riding was bigger than East Yorkshire, but perhaps not.
	Behind the amendments lies a great dislike of retrospectivity. I understand that, but I do not agree with it in this context, as they are halfway to being wrecking amendments.

James Duddridge: Does the hon. Gentleman agree that the greater duty of care involved means that one needs to be much more careful with the wording in retrospective legislation than in normal legislation? That has been raised several times, but I am still unclear as to whether the hon. Gentleman recognises the distinction.

Rob Marris: I agree that one needs to be particularly careful when addressing matters retrospectively through legislation. That is why the question of retrospectivity deserves particular scrutiny in our debates today and in Committee and on Second Reading. In terms of these amendments, the House needs to put retrospectivity in the context—bluntly—of the rich friends of the Conservative party. We are dealing with a measure and amendments to it that are in no way addressed to the average person in the street. I made a calculation, which might have been wrong, on Second Reading and I am now working from memory. I calculated, using the regulatory impact assessment of how many people would be affected and how much money would be raised, that the average person affected by the measure would earn £300,000.

Stephen Hammond: On Second Reading, the hon. Gentleman held a discourse, which I am sure we are about to hear again, on rich friends in the City and across the world. In Committee, my hon. Friend the Member for Braintree (Mr. Newmark) asked the Paymaster General whether she could provide only two examples of what the clause would do. She said that she had provided a long list on Second Reading. I reread the Second Reading debate and could not find it, and she then said that she would provide it for us. I hope that she will do that later. However, perhaps the hon. Gentleman could give two clear examples of the effect of the clause before embarking on his long discourse about prejudice against the City of London.

Rob Marris: I reject the concept of prejudice against the City of London.
	If one reads the regulatory impact assessment, one realises that the clause will raise £240 million per annum after the initial £95 million in 2004–05.

Stephen Hammond: rose—

Rob Marris: The hon. Gentleman is eager—I shall give way shortly. The amendments essentially seek to strip retrospectivity out of the Bill. As I said, we are not discussing a measure that affects the average employee in the street. It tackles artificial tax devices. They are artificial because they change people's conduct so that they behave in ways in which they would not normally engage. The individuals affected should sue their accountants if they did not warn them of the written ministerial statement that was made on 2 December 2004. That is as far back as retrospectivity would go if the Bill were passed as it is worded and the Government chose to exercise retrospectivity through the Treasury. There is a sort of long stop backwards behind the wicket.

Stephen Hammond: The hon. Gentleman speaks of limiting retrospectivity to 2 December 2004. However, he knows that, although the Paymaster General has given us an assurance to that effect, the Bill does not provide for that. That is clear especially from clause 5. We need to re-examine the matter and I am sure that we will do that on Third Reading.

Rob Marris: I shall not be pulled into discussing clause 5 because I am sure you would not allow that, Mr. Deputy Speaker. However, clause 5 is entitled "Agreements and joint elections: Great Britain", so I am not sure whether the hon. Gentleman meant to refer to it. We can discuss that on Third Reading, as he suggests.
	We are considering artificial schemes, which do not cover the average person in the street but deal with people who earn on average £300,000. Almost all, if not all, receive professional advice. Their accountants should have warned them that, if the national insurance contribution device into which they entered began on or after 2 December 2004, they might be caught by what the Paymaster General had said in a written ministerial statement.

Stephen Hammond: I am grateful to the hon. Gentleman for giving way yet again. He mentions tax advice. On Second Reading and in Committee, we developed the point that we have changed to a general anti-avoidance regime and that a tax clearance scheme from Her Majesty's Revenue and Customs or the Treasury should therefore run in parallel with that.

Rob Marris: That is way beyond the scope of the amendments. I am prepared to discuss it with the hon. Gentleman if we have time in the Chamber, or outside the Chamber, but it would not be appropriate to consider general clearance now.

Christopher Chope: Before the hon. Gentleman allows us to believe that there is nothing wrong with the date of 2 December 2004, does he accept that the Institute of Chartered Accountants said:
	"We do not think that anyone reading the Paymaster General's 2 December 2004 statement could have expected the content of this Bill"?

Rob Marris: I have no reason to doubt that such words were said—I think by the Chartered Institute of Taxation—but it does not mean that I agree with them. Professional advisers should have warned those who were about to engage on the schemes or devices of the risk, and I am sure that many reputable advisers did so. If they did not warn of the risk, they could be sued because of effects that were unknown to the individual who entered into a device. If the advisers warned of the risk, the individual entered into it with eyes wide open and knew that the House could introduce a change in the law.

Mark Hoban: Given the time that has been spent on this first group of amendments, and the importance of the succeeding groups, I do not want to spend too much time on this group.
	I shall comment first on amendments Nos. 1, 4, 7, 10 and 11, tabled by my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth), which deal with consultation. I share my right hon. Friend's view that tax legislation should be based as far as possible on consultation. It is important that good legislation should reflect discussions that the Treasury has had with tax advisers, professionals and representatives of industry, so that their views can be taken on board. The Treasury has a fair record of consultation with external bodies. Indeed, when retrospective taxation was discussed in the debates on what became the Finance Act 1978, one of the preconditions of retrospective taxation in trying to close tax loopholes was that there should be consultation with professional bodies and institutions. That is an admirable principle, and it is usually followed. However, it is not always followed. My hon. Friend the Member for Christchurch (Mr. Chope) highlighted, in his brief intervention on the hon. Member for Wolverhampton, South-West (Rob Marris), the view of the Institute of Chartered Accountants that, based on the Paymaster General's statement of 2 December 2004, no one would have expected the Bill to have taken this form. So, surprises do occur, despite the efforts of the Treasury, and sometimes legislation does not take the form expected by those who take a keen interest in these matters, both inside and outside the House.

Dawn Primarolo: I am sure that the hon. Gentleman will have noticed that the tax part of this anti-avoidance measure was in the Finance (No. 2) Act 2005. It was linked to the 2 December 2004 statement, and it was made absolutely clear at that time that there would also be a national insurance part.

Mark Hoban: At this early stage, I am loth to break the   spirit of consensus that my right hon. Friend the Member for Bromley and Chislehurst accused the Government Front Bench of creating. However, while the Paymaster General believes that those comments were clear, they were not as clear or explicit to others as she would like to think.
	I understand why my right hon. Friend has tabled these amendments requiring consultation with the commissioners to appear in the Bill, but, for some of the reasons that he elaborated earlier, I question whether the Commissioners of Revenue and Customs are the right people to consult. He identified their remit and scope from the Act that was passed earlier this year. I put it to him that the short list in amendment No. 2—which was not selected for debate—might have made a better list of parties to be consulted than those referred to in these amendments.
	My hon. Friend the Member for Christchurch tabled amendments Nos. 14 and 15 to tackle the question of whether the Treasury should act in an "expedient" or a "reasonable" manner. He has done the House a great service by offering an alternative approach to discussing these matters and to determining who should be the judge in such cases. I shall not trade dictionary definitions with hon. Members, but my hon. Friend and others have flushed out some interesting issues about expediency and reasonableness. I am sure that those whose job it is to implement and follow this legislation will be interested in what the Paymaster General has to say about this.
	One issue on which we might want to touch for a moment is the suggestion of the hon. Member for Wolverhampton, South-West that morality does not necessarily play a role in taxation. His strictures on the City of London and avoidance schemes, however, suggest that he applies his view of morality when he chooses.

Rob Marris: I think that the Official Report will show—obviously, I stand to be corrected—that I only mentioned the City of London in response to an intervention. I did talk about rich people in relation to the legislation, but I never mentioned the City of London except in response to an intervention.

Mark Hoban: I apologise for using the hon. Gentleman's remarks in response to an intervention. Next time we come on to the topic, perhaps I should refer to rich people, and that will make him happy. It just shows the problems of responding to interventions from the Opposition, or from the Government Benches, depending on the side of the House on which one sits.

Vincent Cable: I want to support amendment No. 14, which seems reasonable and sensible—"reasonable" is the operative word.
	We are considering the principle of retrospective taxation. The hon. Member for Wolverhampton, South-West (Rob Marris) has referred to that being applied in this case against fat cats. One can support the principle, but it might be applied to fat cats today and poor people tomorrow. There is an underlying principle of retrospection that must naturally concern us.
	It might particularly worry the right hon. Member for Bromley and Chislehurst (Mr. Forth) that his position has quite a lot of support not just from me but from the European Court of Justice. He did not cite that in his defence, but European law, not just the Magna Carta, appears to have some concerns in this area. On Second Reading, I quoted a relevant passage from an April judgment by the Court, which was important and would be applied by anybody seeking to use the law in relation to this Bill. It made two points, one unequivocal and the other more nuanced.
	The unequivocal point was that
	"The principles of the protection of legitimate expectation and legal certainty form a part of the Community legal order. They must accordingly be observed . . . by the Member States".
	That makes it clear that infringement of legitimate expectation by retrospective legislation is unacceptable in legal terms. The more nuanced expression, on which the legal battles will ultimately be fought, was that
	"Although in general the principle of legal certainty precludes a Community measure from taking effect from a point in time before its publication—
	that is, retrospectively—
	"it may exceptionally be otherwise where the purpose to be achieved so demands and where the legitimate expectations of those concerned are duly respected".
	We are concerned with trying to build into the legislation the maximum possible protection for those legitimate expectations, to ensure that they are respected. Something that is merely expedient from the standpoint of the Treasury, which is practical from its point of view and helps it to garner more revenue—which, of course, we support in a broad sense—is dangerous when applied to that principle. Building in the limited protection that would be given by the word "reasonable" seems the very minimum that one could ask. The hon. Member for Christchurch (Mr. Chope) is therefore to be commended for tabling the amendment, and I will certainly support it.

Dawn Primarolo: This has been a long and broad debate, covering a number of areas. I want to touch on each of them in responding to the amendments. First, I need to remind the House of the context of the proposals that we are considering this afternoon.
	Both the right hon. Member for Bromley and Chislehurst (Mr. Forth) and the hon. Member for Christchurch (Mr. Chope) referred to the question of whether this action was just or right, and the hon. Member for Christchurch spoke about using the mechanism to raise higher national insurance. I remind the House that between 1998 and 2005, both the Conservatives and the present Government produced anti-avoidance legislation in Finance Bills to counter an abuse of tax and national insurance, particularly involving high-value bonuses. Individuals were seeking to disguise their bonuses in order not to declare them as salary, or employment remuneration. They tried to conceal the bonuses, or pretended that they had received the largesse for some other reason and that therefore it was not subject to the normal, straightforward rules of national insurance and tax.

Brooks Newmark: Will the Paymaster General give way?

Dawn Primarolo: I want to make some progress.
	As the hon. Member for Christchurch implied, this is not about making people pay more national insurance. It is about ensuring that they pay the national insurance that the House, over decades, has decided that everyone should pay. It is a question of fairness. Unfortunately, however, all Governments faced the same problem. Governments would see a contrived avoidance scheme and close it down; the avoiders would then move to another highly sophisticated scheme, which would have to be targeted.
	The current Government took a number of steps. I announced the first in a statement on 2 December 2004, making it clear not just that the Government would close the loopholes that they had identified so far, but that any future attempt not to pay the right amount of national insurance or tax would be prevented. The hon. Member for Fareham (Mr. Hoban), whom I welcome to his first debate as a member of the shadow Treasury team, said that that statement was unclear. Let me read a sentence from it, because I am not sure how people can claim to be confused by it or not to understand it.
	"We intend that from today both tax and NICs legislation should achieve our objective of subjecting the rewards of employment to the proper amount of tax and NICs, however the rewards are delivered."—[Official Report, 2 December 2004; Vol. 427, c. 41WS.]
	That seems perfectly clear to me.
	The statement announced the closing of existing loopholes, which was dealt with by Finance Bill tax measures and is dealt with by measures in this Bill. It also introduced a strong deterrent. It said "Just don't do it, because however you do it, we will close down the scheme." The amendments would remove, or weaken, that deterrent. They effectively say to those in the tax avoidance industry "Let us continue to play this game of cat and mouse. You carry on finding ways not to pay tax, and we will close the schemes down after the Treasury has lost the revenue." That is not acceptable to any fair-minded or, dare I say, reasonable person.
	The hon. Gentleman also brought up the question of consultation, and the roles of the commissioners and the Treasury. It was a good debating point, but was based on a fundamental misunderstanding of the workings of Her Majesty's Revenue and Customs. As the Bill only completed its passage through both Houses earlier this year, I find that a bit strange.
	Her Majesty's Revenue and Customs is a statutory body, and Treasury Ministers represent it in Parliament. It is therefore appropriate for the Treasury to introduce the legislation. Both here and in the other place, there were debates on exactly what was meant by the term "Treasury" in legislation. It means the Treasury as a Department, meaning the Treasury and HMRC.
	On the specific amendments, I have to ask why the Treasury and HMRC would not be working together on the regulations. Of course they would, so amendments Nos. 1, 4, 7, 10 and 11 are wholly unnecessary. Whenever Treasury regulations are to be made to supplement primary tax and national insurance contributions, officials from both the Treasury and HMRC always discuss and consult each other on the wording. It is simply unnecessary to enshrine such a normal practice, which has been accepted as straightforward administrative practice for an extremely long time, in the Bill. Doing so would be a waste of parliamentary and drafting time.
	Conservative Members then went on to stress the need for consultation, but they know perfectly well that the regulations are subject to consultation and affirmative procedure. Anyone who wants to express their views on regulations can do so. The notion of consultation, as it appears in the amendments, is simply preposterous.
	What of amendments Nos. 14, 15 and 17? I do not believe that the right hon. Member for Bromley and Chislehurst intends to destroy the Bill, but if he does, he should have said so when he moved his amendments, rather than dress up his aims in linguistic niceties about the meaning of "reasonableness" and "expedient". The amendments strike at the heart of the caveat of a deterrent. If the statement of 2 December 2004 holds in its deterrent effect, no legislation will be necessary because people will not try, through remuneration—this applies only to employment remuneration—to avoid paying their proper taxes or insurance.
	The idea that in those three amendments—Nos. 14, 15 and 17—all that the right hon. Gentleman is doing is a bit of linguistic tidying-up is simply not the case. If he wants to know the use of "expedient", he needs to see it in the wider context. He knows full well that it is not about looking into whatever dictionary one cares to take off the shelf because the context of the word is important as well. In the particular case of proposed new section 4C, the expediency applies to certain specified purposes, which is quite right. If he wants precedent for using the word "expedient" rather than "reasonableness", he need look no further than to his own Government in 1992, although I can understand why he now wants to distance himself from decisions that he was happy to vote for at the time.
	This has been an interesting debate, but it would have been better if the right hon. Member for Bromley and Chislehurst had been more straightforward with the House about what he was attempting to do—to remove the strong and important deterrent effect of the regulations. If the right hon. Gentleman still wants to put his amendments to the vote, I ask my hon. Friends to oppose them.

Eric Forth: It certainly has been a revealing debate and the Paymaster General's petulance gives the lie to some interesting aspects of the Government's attitude—not least the fact that she has reduced the commissioners to a mere cipher of the Treasury. I do not know what the commissioners think about that or whether the Government would want to view their role in those terms. We now have it on the record that the Paymaster General is asking why we should bother consulting the commissioners because they are one and the same with the Treasury and there would be no point in doing so. We can leave that matter hanging for future study and reference, but it has been a remarkable revelation from a senior Minister about the diminished role of those commissioners.
	The Paymaster General's defence of the word "expedient" and her rejection of our attempt to introduce the word "reasonable" were equally revealing. She seems to be saying that any measures designed to counter tax avoidance must be expedient, or they would not work, and that any suggestion of reasonableness is unacceptable. Well, that is very revealing of the Government's attitude both generally and specifically. So from that point of view, this debate, through the vehicle of the amendments, has shone a searchlight not just on the Bill's wording but on the attitude of Ministers and Departments—in this case, the Treasury.
	Having listened carefully to the debate and to the—

Brooks Newmark: Is not the Paymaster General's earlier answer to my right hon. Friend a case in point? It may well have been an expedient response to his amendment, but it certainly was not a reasonable one. Perhaps we should look at this discussion in that context.

Eric Forth: I am grateful to my hon. Friend, who has elegantly summed up the tone of this debate and illustrated the attitude of the Paymaster General and the Treasury.

Christopher Chope: I know that my right hon. Friend is normally suspicious of consensus, but has he noted the support among Liberal Democrats for my amendment No. 14?

Eric Forth: Yes, and I thought that it was very significant.
	Having listened to what my hon. Friend the Member for Christchurch (Mr. Chope) said about my amendment—I indicated at the outset that I had a realistic view of what I was trying to achieve—I beg to ask leave to withdraw the amendment. I understand, however, that my hon. Friend may wish to press his amendment No. 14 to a Division.
	Amendment, by leave, withdrawn.
	Amendment proposed: No. 14, in page 1, line 17, leave out
	'appears to the Treasury to be expedient'
	and insert 'is reasonable'.—[Mr. Chope.]

Question put, That the amendment be made:—
	The House divided: Ayes 44, Noes 237.

Question accordingly negatived.

Eric Forth: I beg to move amendment No. 5, in page 2, leave out lines 10 to 12.

Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments:
	No. 6, in page 2, leave out lines 13 and 14.
	No. 16, in page 2, line 14, leave out '2nd December 2004' and insert '11th October 2005'.
	No. 18, in page 3, line 23, after second 'any', insert 'future'.
	No. 19, in page 3, leave out lines 32 to 38.
	No. 20, in page 3, leave out lines 39 to 41.
	No. 9, in page 4, leave out lines 16 to 18.

Eric Forth: In many ways, these amendments bring us to the core of the Bill. I shall leave my right hon. and hon. Friends perhaps to concentrate on other aspects of the measure, but the matters in clause 1(1) that attracted my attention relate to subsections (4) and (5) of proposed new section 4B of the Social Security Contributions and Benefits Act 1992, which I seek effectively to delete from the Bill.
	I shall look first at proposed new subsection (4), which says:
	"It does not matter whether the retrospective tax provision in question was passed or made before the day on which the National Insurance Contributions Act 2006 was passed."
	That is blatant beyond all belief. The Government now no longer even attempt to conceal what they are up to or to divert our attention from it. I suppose that I grudgingly give them almost a degree of credit for the fact that they are being perfectly blatant in what they are saying. We now have a Bill, for which the Government have aspirations of its becoming an Act on the statute book, that says, "It does not matter. We can do pretty much what we want, whether or not it was passed now or at some other time—who cares?"

Peter Bottomley: My right hon. Friend is being uncommonly generous. In fact, the Government are being just as arbitrary about what they pay out, let alone what they get in—for example, the discrimination against any of our pensioners who live in Canada, rather than the United States, or in the rest of Europe, rather than the European Union. That happens all the time.

Eric Forth: Of course I agree with my hon. Friend. The Government would probably say, "Well, it does not matter really, does it?" because those folk are far away and do not have a direct voice in what is going on here. We are talking about the Government saying that it does not matter how, when or whether they raise money, but I suspect that that would apply equally to their attitude to whether they disburse money.
	Proposed new subsection (5) says:
	"But nothing in subsection (2) authorises regulations to be made which have effect in relation to any time before 2nd December 2004."
	My hon. Friend the Member for Christchurch (Mr.   Chope) has tabled an amendment by which he seeks to alter that date. I would prefer to remove it altogether. The Paymaster General attempted to justify that date in summing up the previous debate. She said something along the lines of, "If a Minister says on a certain date we may legislate in the future to do something that you may do in the future but we are not sure and we really don't care very much, that is all right."
	We are now into the era of blanket provision, forecasting or attempting to forecast what might be and giving the Government what amounts to a blank legislative cheque to do whatever they like. That may be all right in the minds of Ministers whose attitude, frankly, to government and Parliament over the past seven or eight years has been consistently contemptuous—we have almost come to accept that—but to have it spelled out in a Bill is going way too far. It is one thing to alter the procedures of the House, to reduce, curtail or deny debate or to cut down almost to nothing the time available to scrutinise legislation in Committee, but when phrases such as "it does not matter" or "any time before" this or that date are included in a Bill, we are getting into extremely dangerous territory.

Greg Knight: My right hon. Friend is making a good point. If passed, will not the Bill rip up the rights that we have enjoyed in this country since Magna Carta? Under legislation passed by the House, the citizens of this country should know precisely where they stand. Are we not returning to the pre-Magna Carta age, when law used to be made at the whim of the king, but it is now being made at the whim of the Government?

Eric Forth: Yes, I fear that my right hon. Friend is right. I am worried that we are finding that gradually over time—Bill by Bill and Act by Act—what we always thought was sacrosanct, even though we do not have a written constitution, is being eroded by such phrases. For most of my life, I have taken a lofty attitude to written constitutions. I thought that we did not need them and that they were for only people such as the Americans and the French. I have now come to the view that only a properly written constitution will protect us from Governments such as this. Such phrases in Bills have the effect—whether openly or surreptitiously and gradually or suddenly—of removing from our lives what we thought were precious certainties. If we do nothing else, surely we must remove phrases such as "It does not matter" from our legislation.

David Howarth: I am following what the right hon. Gentleman says with great interest and agree with most of it. However, I am puzzled about the effect of amendment No. 6. Surely leaving out those lines from the Bill would increase the Government's powers under proposed new section 4B(2) and thus make things worse?

Eric Forth: I concede to the hon. Gentleman that that is a possibility. It is something that he and the House must take into account when they decide what to do about the amendment. I am trying to make the general point at the moment that such provisions appear to give the Government enormous and unlimited powers to do whatever they want, whenever they want, and, indeed, to do so retrospectively. That danger exists throughout the Bill.
	When we consider the other amendments in the group, we will find that they address a similar area of concern. Proposed new section 4C(3)(a) is a similar measure that says that regulations may make provision to modify
	"any provision of any enactment".
	Again, the Bill will give extraordinarily wide powers under regulations. The problem is that owing to the way in which our parliamentary procedures work, regulations cannot be amended. Whether regulations are considered under the affirmative or negative procedure, they come before the House on a take-it-or-leave-it basis.
	Bad enough though such a phrase is, it is in many ways worse than it would be if it related to primary legislation. Such legislation is at least, in theory, amendable, although goodness knows that we get little opportunity to amend legislation these days, unless the Government have cocked something up and have to amend their own legislation, which happens all too frequently.
	Proposed new section 4C(3)(b) says that regulations may make provision
	"for any provision of any such enactment to apply in such cases, and with such modifications (if any), as the regulations may prescribe."
	The wording is becoming more general and generous, but less restrictive and specific. When confronted with such wording, the House is being asked to say to the Government, "We trust you. We think that this is generally rather a good idea,"—which, by the way, I do not, but we will come back to that on Third Reading. However, the Government are saying to us, "If you sign up to these words, there will and can be no comeback whatsoever." By using the word "any" over and over again, the Government are telling us that they will do what they think is appropriate at the time, retrospectively or otherwise.

Rob Marris: I draw the attention of the right hon. Gentleman to the bit of proposed new section 4C(3)(a) that he did not read out. It says:
	"including this Act and any enactment passed or made on or after the commencement day".
	That is not retrospection.

Eric Forth: That line is not retrospective—it must be the only provision in the Bill that is not. I congratulate the hon. Gentleman on finding the one line of the Bill that is not retrospective, but that does not exonerate the Government from any guilt about, or blame for, the way in which they are trying to give themselves the broadest possible powers to do almost anything that they want at any time. Regarding that provision, I concede to the hon. Gentleman that the Government may use such powers only after the commencement day, but I am not sure that that gives me much comfort.

Rob Marris: I understand the right hon. Gentleman's remarks about the powers of the Government and I tend to agree with him about the lack of ability to amend certain statutory instruments. However, in terms of the part of the Bill that I read out, it would be open to the House in a subsequent enactment to say that new section 4C(3)(a) and so on will not apply. There could be an override, decided in the House, in subsequent legislation, so the House could have the opportunity to decide.

Eric Forth: The hon. Gentleman has been here long enough to know that subsequent legislation is not as easy as it sounds when he says it quickly. If he were to ask his hon. Friends who are Ministers how easy it is for them to get the Bills that they want, to do the things that they want or to correct the things that they want to correct, he would get a pretty dusty response. There is always a debate, and it is a very important one, as to whether it is better to have a measure in a Bill, thus making it difficult to change by subsequent primary legislation, or whether, ironically, it is preferable to have it in regulations because although, under the current procedure, they cannot be amended, they can be returned to somewhat more easily.
	I make a half-concession to the hon. Gentleman in the sense that if something were to be done by regulations, and they were faulty, that could at least be picked up. In fact, I can assure him that the Joint Committee on Statutory Instruments spends its entire life doing just that, if I may say so with all due modesty, very well indeed and with great competence and élan.

Edward Balls: I am struggling to follow the argument, but I was interested in some of the right hon. Gentleman's earlier comments about constitutional reform and a commitment to a written constitution, which seemed to be an important statement. He said that having a written constitution was a rather French thing to do because, in the past, the French—and the Americans—have tended to have such constitutions. Presumably, a written constitution would, in some ways, make us a bit more French, rather than a bit more British, although presumably we would have a British written constitution rather than a European written constitution. I thought that more clarity would be helpful.

Eric Forth: I am grateful to the hon. Gentleman for saying that something I said was important—it is the first time that anyone has said that to me in my time in the House.

James Duddridge: The hon. Gentleman's comments were interesting, but were they in any way relevant to this debate?

Mr. Deputy Speaker: I can see that the hon. Gentleman is getting himself into training for elevation to the Chairmen's Panel one day. He beat me to the draw. What he said is very apposite, and what the hon. Member for Normanton (Ed Balls) said was not.

Eric Forth: My frustration, of course, is that I am unable to give the hon. Gentleman the answer that I would love to give him. Knowing you, as I do, Mr. Deputy Speaker, I dare not even attempt it.

Edward Balls: rose—

Eric Forth: I will give the hon. Gentleman another go, provided that he will not tempt me to get into your bad books, Mr. Deputy Speaker, which is the last thing I would want to do.

Edward Balls: I am grateful for the chance to intervene again, and I shall try to make sure that I phrase my question more properly. If we had a British written constitution, would that mean that concerns such as those that the right hon. Gentleman has about the Bill would be tackled in another place or through the courts rather than in Parliament? Does he think that that would strengthen or weaken our parliamentary democracy?

Eric Forth: With more than half an eye on you, Mr. Deputy Speaker, I say briefly that we should have a British written constitution, which would, among other things, protect us from further depredations from the ghastly European Union and go a long way towards protecting taxpayers from the ghastly Government. I hope that gives the hon. Gentleman some idea of where I am coming from and where I would like to go.
	I have given enough of a flavour of my reasons for believing that these amendments, too, are an important part of our scrutiny of the Bill. Given my unhappiness about the whole concept of retrospection in any case, it is the words in the parts of the Bill that I have highlighted that give me great unease. For that reason I hope that the House is able to support, if not all the amendments before it, certainly the one referring to amendment No. 5.

Christopher Chope: I enthusiastically support amendment No.5. With no collusion, my right hon. Friend the Member for Bromley and Chislehurst and I filed amendments in exactly the same terms. That must show something, although I am not quite sure what. I hope the House will take the view that it shows that we are working on the right lines.
	Amendment No. 5 is important as it removes one of the worst and most oppressive elements of the Bill, which offends against all the principles of natural justice. I am not convinced about amendments Nos. 6 and 20.
	I shall devote most of my remarks to the support of amendment No. 16, which proposes leaving out the words "2nd December 2004" and inserting instead "11th October 2005"; in other words it substitutes the date when the Paymaster General made her written statement to the House for the date when the Bill was published and thus available for inspection of its contents. Although ideally, retrospection should not take effect before the date of a Bill's enactment, it is a well-established convention for Finance Bills that retrospection can apply from the date when the Bill was published.

Eric Forth: My hon. Friend has just pointed out that the measure was originally promulgated through a ministerial written statement. Does he share my extreme unease that written ministerial statements are an ever more common way of promulgating Government policy because they cannot be questioned? Ministers know that instead of coming to the House, making a proper statement and subjecting themselves to questioning by Members of Parliament the written statement cannot be subject to questioning.

Christopher Chope: I very much agree, especially as the title of the ministerial statement was "Finance Bill".

Dawn Primarolo: I think that I can help the hon. Gentleman and the right hon. Member for Bromley and Chislehurst (Mr. Forth). The 2 December 2004 statement was part of the pre-Budget report, which was subject to statement and questions in the House. It was then subject to debate, as some of their right hon. and hon. Friends can confirm, in the proceedings on what became the Finance (No.2) Act 2005 when the tax measures, the sister measures to national insurance, were debated. It has in fact been questioned and debated a lot.

Christopher Chope: The point at issue is whether on that date in December 2004 anyone reading that written statement, which was headed "Finance Bill"—it did not say "National Insurance Contributions Scam", which might have put people on notice—

Brooks Newmark: Does my hon. Friend share my concern that such written statements will create a precedent for further retrospective legislation?

Christopher Chope: Certainly. The idea of governing by ministerial fiat, by statement, is dangerous, and not only in the context of the measure that we are discussing. One might consider the consequences of this year's pre-Budget report, where the Treasury unsaid what it had previously said about the eligibility of the inclusion of ordinary houses in self-invested personal pensions. An earlier ministerial statement had announced that from April 2006 it would be possible for people to include property in their SIPPs and on that basis many companies set up businesses and incurred expense and risk. The Government will not compensate people who were adversely affected by anticipating Government legislation. I have no quarrel with people anticipating legislation. They took the Government's word as a true intention of what would happen.
	It turns out that that is not going to happen. As recently as 14 November this year, I received a letter from the Economic Secretary justifying and, indeed, commending the proposals that SIPPs should include assets such as houses. He pointed out that that would not have an adverse effect on the property market. In any event, he said, only 1 per cent. of pension funds would be affected. Anyone who assumed from that letter that they should invest in such pension funds or set up schemes to facilitate such investment would have been acting in advance of the Finance Bill and therefore at their own risk. Unfortunately, no compensation is available in such a situation, but the Government are suggesting that if they make an announcement through a written answer on national insurance contributions, it should be regarded as gospel. Their approach is therefore inconsistent. We appear to be moving into a new era of government by fiat—whatever Ministers say goes—while, at the same time, letters are written to introduce provisions for compensation for people who act on the basis of those Government statements only to find that they have acted to the detriment of their interests.

Eric Forth: Does my hon. Friend agree that since the SIPPs fiasco, no one should ever believe a Government Minister again, if, indeed, they ever did so? If there is any doubt about that at all, they should pay attention to the distinction that he made between the Minister's suggestion that, if the Government said something, everyone should believe it and act on it, and the fact that people did act on SIPPs and had their fingers burned. We now know where we stand—we should never ever believe what a Government Minister says, especially one from the Treasury.

Christopher Chope: I wholeheartedly agree, which is why Magna Carta, to which my right hon. Friend the Member for East Yorkshire (Mr. Knight) referred, and the wise words of Adam Smith in "The Wealth of Nations", which have been mentioned by my hon. Friend the Member for Ludlow (Mr. Dunne), are pertinent.

Greg Knight: Is my hon. Friend aware that he can pray in aid the judgment in the case of The Sunday Times v. The United Kingdom 1978–80, in which the European Court concluded that a citizen must be able, if necessary with appropriate advice, to foresee to a reasonable degree the consequences of a given action? That case required Governments to make their laws predictable and known to the citizens whom they are supposed to serve. If the Bill is enacted, does my hon. Friend share my view that it is likely to be challenged in the European courts because it breaches human rights?

Christopher Chope: Yes, that seems extremely likely. Indeed, page 12 of the explanatory notes, which carries the sub-heading, "European convention on human rights", suggests that the Government half-expect that to be the case. Paragraph 82 states:
	"The Government also considers that regulations that may be made under the power are capable of maintaining a fair balance between the individual's interest and the general community interest without placing an excessive burden on the individual, and therefore that the regulation making powers do not breach obligations".
	The Government are talking about capability, but we should ensure that it is impossible for the regulations to do anything other than comply with the ECHR. The Bill, however, does not make any such provision.

James Duddridge: I am confused, as the front page of the Bill carries a statement by the Chancellor of the Exchequer that I find difficult to reconcile with my hon. Friend's argument:
	"In my view the provisions of the National Insurance Contributions Bill are compatible with the Convention rights."
	Will my hon. Friend clarify the position?

Eric Forth: The Chancellor would say that, wouldn't he?

Christopher Chope: Indeed. My hon. Friend the Member for Rochford and Southend, East (James Duddridge) is an assiduous legislator, and he knows that we must look at the small print.
	If one could take the statement at face value, there would be no need for the explanatory notes, which are after all produced by the Government. The notes make it clear that there is an issue, which has been raised in the other place and by accountants and tax lawyers. If the Bill is passed into law in its present form, we may well find that it results in the sort of challenges to which my right hon. Friend the Member for Bromley and Chislehurst referred.

Brooks Newmark: My hon. Friend mentioned Adam Smith. There is a great passage in "The Wealth of Nations" that has a bearing on our debate. Adam Smith wrote in 1776 that
	"the tax which each individual is bound to pay ought to be certain and not arbitrary. The time of payment, the manner of payment, quantity to be paid ought to be clear and plain to the contributor and to every other person."
	Is not the problem with the Bill the fact that it is vague and arbitrary? That is our concern.

Christopher Chope: My hon. Friend is right. I did him a disservice in attributing the use of that quote to my hon. Friend the Member for Ludlow. It is good that we have relatively new Members of the House who are so familiar with that great work, "The Wealth of Nations". That augurs well for liberty and freedom as issues that will be debated much more fully in the House. I am glad my hon. Friend the Member for Braintree (Mr.   Newmark) is present today to develop the argument that he started articulating in Committee.
	We are discussing not a practical matter, but an issue of supreme principle and importance. There are practical consequences of Governments legislating by fiat, and there are times when, as a Member of Parliament, one might wish that the law could be retrospective. For example, I have a constituency case where somebody is arguing bitterly that a single prostitute living above a shop should be deemed to be running a brothel. Unfortunately, the law says that in order for it to be a brothel, there must be more than one prostitute operating. My constituent would be delighted if the Government introduced legislation making it retrospectively criminal to be doing what that individual is doing, but those of us who believe in the rule of law and the principle of parliamentary legislation would not support such retrospection, even if it was thought to be expedient. I am sure there are people who would say that such legislation was expedient, but I do not believe we should allow that.
	It is true—this is the point that the Paymaster General made—that there are precedents for retrospection. They go back to the time of the second world war, but during the 1970s, under the Labour Government of the day, the then Chancellor, Denis Healey, now Lord Healey, brought in rules to deal with tax avoidance. Retrospection was a controversial issue at the time and the debate about that resulted in the development of the Rees rules. Those were drawn up by Lord Rees, who at the time was shadow Chief Secretary to the Treasury and went on to be Chief Secretary to the Treasury and an important member of the Government of my noble Friend Lady Thatcher.
	Mr. Rees, as he was in those days, argued that retrospective legislation should be subject to four conditions. First, the warning given in the House of Commons
	"must be precise in form. A mere suggestion that there are vague schemes of tax avoidance that must be counted should not suffice. Secondly, the problem at which the warning has been directed should immediately be referred to a committee".
	He referred to one that he understood existed, made up of members of the Inland Revenue and the accountancy and legal professions.
	"Thirdly, if the committee can hit on appropriate legislative provision, the draft clause . . . should immediately be published in advance of the Finance Bill so that those who are likely to be in the field of fire will have a second clear intimation of what to expect. Fourthly, such a clause must, without fail, be introduced in the following Finance Bill . . . I believe there may be situations in which"
	that approach
	"is the only solution if we are to counter avoidance of the sophistication and scale which we understand has been current of late. But if a Government are to adopt that remedy, it must be on"
	that basis.
	The Paymaster General cannot suggest that there are no precedents for retrospection, because there are precedents for retrospection with safeguards, and I tabled amendment No. 16 because those safeguards have not been met in this particular case. The statement by the Paymaster General on 2 December 2004 was not the subject of immediate consultation with the relevant professions, and it was not the subject of a clause in the next Finance Bill. I agree that that is true of the tax provisions, but they are a separate issue, because we are discussing provisions relating to national insurance contributions.
	I thought it telling that the regulatory impact assessment states:
	"As this is a measure directed at tax avoidance, consultation was not appropriate before the publication of the Bill. The proposal is to apply to NICs the existing rules for disclosure of tax schemes. These rules were the subject of detailed discussions with the accountancy and legal professions, and other businesses during 2004".

Eric Forth: Now I am puzzled, because I am sure that my hon. Friend heard, as I did, the Minister boasting that consultation is in the bloodstream of the Treasury and that the Treasury does nothing without consulting generously and in detail, but my hon. Friend's argument seems to run counter to that. Can he explain that paradox?

Christopher Chope: Hon. Members must draw their own conclusions. When the Paymaster General made her statement, if the Rees conventions had been complied with, consultation with the relevant parties would have been carried out immediately and the Bill would have included the appropriate draft clauses. However, the regulatory impact assessment tells us that no detailed consultation took place before the Bill was published, because the measure is directed at tax avoidance. If the Paymaster General is right in saying that everything was plain and apparent back in December 2004, what harm would there have been in working out the detailed legislative formula that was to flow from the proposition set out on 2 December 2004?
	As the Institute of Chartered Accountants has said:
	"We do not think that anyone reading the Paymaster General's 2 December 2004 statement could have expected the content of the Bill."
	"Anyone" includes not only dullards, but smart lawyers, accountants and others. I know that my hon. Friend the Member for Fareham (Mr. Hoban), who is on the Front Bench, is a distinguished accountant, and perhaps he will tell us later whether he knew exactly what would happen when he read the Paymaster General's statement. If it was obvious, there could have been no harm in having detailed consultations with the profession, but that never happened.
	Amendment No. 19 would remove a grotesque Henry VIII provision that gives a power to change primary legislation by regulation and to do so, in certain circumstances, retrospectively. That is wholly unjustified, even in what the Minister described as the extreme circumstances that make the Bill necessary. I hope that she can explain why she thinks that this particular provision is necessary. This is a very serious issue. We are talking about an assault on fundamental freedoms that go back to the days of Magna Carta. The Minister will say, as always, that there is a precedent. The problem is that every time we take away one of those freedoms, or salami-slice it a little bit, we are gradually giving the state more power.
	The Government argue that the Bill has an element of proportionality. I should like to draw the House's attention to what the explanatory notes say about article 8 of the European convention on human rights. Paragraph 84 states:
	"Clause 7 enables, but does not require, provision to be made requiring disclosure".
	Paragraph 85 states:
	"The Government considers that any perceived interference with rights under Article 8 of the Convention created by these provisions is justified under paragraph 2 of that Article on the grounds that it is necessary in the interests of the economic well-being of the country."
	If the provision was in the interests of the economic well-being of the country because it would raise vast sums of money proportionate to the overall budget of the Exchequer, one could begin to see that it might comply with the article.
	Let us consider this in context. At its height, the provision will raise £96 million for the financial year 2004–05. Yet, earlier this month, the Government announced in the pre-Budget report that they propose to borrow £151 billion over the next five years. It is hard to see that raising £96 million—which equates to £3 or £4 per person in employment—through retrospective legislation can be justified on the basis of proportionality. Is that modest gain justified by the enormous assault on our civil liberties and human rights represented by this provision? I do not think so, and that is why I hope that the House will support the amendment.

Greg Knight: I want to start by speaking about amendment No. 18, which is a probing amendment. If the Paymaster General can satisfy me that it is unnecessary, I will not press it to a Division. However, I should like to hear her comments on it.
	Amendment No. 18 would add the word "future" to the sentence
	"any purpose relating to any statutory payment",
	so that it would read, "any purpose relating to any future statutory payment". I believe that there are only four sorts of statutory payment: sick pay, maternity pay, adoption pay and paternity pay. The amendment would remove the potential for retrospection from any statutory payments. I should therefore like to know whether the Paymaster General envisages the use of the retrospective provisions for statutory payments. If not, should not the amendment be incorporated in the Bill? If she does envisage such use, will she give an example of when it would be justified?
	Statutory pay is given for a good reason and people who receive it often spend it almost immediately. If the Government intend to claw it back, the reason for doing that should be placed on record.

Eric Forth: The concept of retrospective maternity pay is rather interesting.

Greg Knight: The retrospective clawback gave me cause for concern.
	I should like to make some general comments about the speeches so far. We have heard some powerful contributions and I agree with everything that my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) said when he set out his concerns. I part company with him because I am not sure whether his amendments would have the effect that he wishes. The intervention of the hon. Member for Twickenham (Dr. Cable) hit the nail on the head. If the amendments are accepted, there may be less, not more, protection in the Bill for matters that my right hon. Friend would wish to have protected.

Robert Smith: Would not amendment No. 16 provide some protection and some improvement on the clause? The hon. Member for Christchurch (Mr.   Chope) tried to raise matters for debate in the amendment. However, were he to press it to a vote, he might do more damage.

Greg Knight: I am still reflecting on whether I would support my hon. Friend the Member for Christchurch (Mr. Chope) if he pressed amendment No. 16 to a Division, but I believe that it would provide greater protection.
	I am worried about the human rights effect of the Bill.   Others share that concern. It was interesting to read the evidence that was given to the Treasury Committee in December 2004. John Whiting from PricewaterhouseCoopers went as far as to suggest that the avoidance measure that we are discussing
	"does have . . . human rights implications".
	He contradicted the Chancellor's statement that the Bill complies with human rights legislation. He stated:
	"There is never any objection to the Government, the Minister, standing up and saying, 'As of today, we are going to block such and such", so let's get that clear . . . The idea that you can stand up and say, or put a written statement down and say, "Right, if something turns up in the future, we don't know what it is, but we reserve the right to come back to today and basically change the way the tax law operates', let's be clear, the system of tax we have in this country is that you are taxed on the basis of what the law says. If, therefore, there is a possibility of retrospectively altering your tax bill, then it does have very interesting human rights implications and it has been mooted that this idea of retrospection could now be vulnerable to human rights challenges if we go that far."
	Anne Redston from Ernst and Young gave written evidence to the Committee. She said of the Bill:
	"This is a radical new departure for the UK, which has for centuries accepted that tax cannot be levied unless parliament has passed specific legislation authorising its collection."
	That principle is enshrined in the Magna Carta. As Simon Schama put it in his "A History of Britain":
	"The Magna Carta . . . spelled out for the first time, and unequivocally . . . that the law was not simply the will or whim of the king but was an independent power in its own right."
	The history of democratic government in Britain has, as one of its fundamental themes, the establishing of the right of citizens to be taxed not by government fiat but by the clear words of statute, following the introduction of specific legislation. What is the Minister's answer to those charges? Many of us fear that the Bill rips up the rights that were enshrined in the Magna Carta, and that it should not therefore be proceeded with in its present form.

Brooks Newmark: In respect of the date of retrospection, it is not that 2 December 2004 is a particularly offensive date. It may well have been a lovely day; I do not know, because I was not fortunate enough to be a Member of this House at the time. It might well be reasonable to backdate to that date national insurance contributions that have been avoided by means of "dishonest schemes"—to use the Paymaster General's words—although we continue to disagree on that point.
	The implication of the Bill is that we shall set a dangerous new precedent for the way in which the House conducts its business. Would it become a requirement that all financial services professionals should, instead of reading the Financial Times over their cornflakes, thumb through a copy of Hansard, looking for ministerial statements that might affect them two years down the road? Should they believe that whenever the Government express an intention to legislate, they will follow it through? We have had broken promises from this Government before. Should tax advisers warn their clients of the potentially earth-shattering—or at least profit-affecting—implications of the Paymaster General's words every time she addresses us with her customary eloquence? No, that would be absurd. We have endured the loss of clarity in our tax system. We must not endure a further erosion of certainty, otherwise we will become prohibitively uncompetitive as a nation.
	Legislation should be proportionate. It is said that this legislation will affect only the dishonest. It will not. It will have a knock-on effect throughout the financial services industry. Will the Minister at least exclude one knock-on effect by confirming that the use of ministerial statements to signal retrospective taxation will not proliferate into a general principle?

Rob Marris: I shall try to be brief, for the sake of my right hon. Friend the Paymaster General.
	I would be interested to hear from the hon. Member for Christchurch (Mr. Chope) whether the Rees principles to which he referred dealt with tax avoidance. If he said that in his speech, I did not pick it up.

Christopher Chope: indicated assent.

Rob Marris: I see the hon. Gentleman nodding. In the case of this legislation, we have precision, consultation—albeit before the statement—and now the equivalent of a Finance Bill to deal with national insurance. So those principles seem broadly to have been met.
	The right hon. Member for East Yorkshire (Mr. Knight) and the hon. Member for Braintree (Mr. Newmark) talked about predictability and certainty. The right hon. Member for East Yorkshire referred to a 1979 legal case, and with his usual generosity, he included a quote to give the House a rounded picture. It contained the words "with appropriate advice". That is at the heart of the amendments, of the issue of retrospectivity, and of the practical sense of where we are at in regard to this possible legislation.
	I said earlier—and I will say it again because it is absolutely right to point this out—that the people who engaged in the kind of manoeuvres that might be caught, were the Bill to become an Act of Parliament, as I hope it will, were people who would almost invariably have sought professional advice, unless they were themselves accountants, in which case they would advise themselves.
	We are not talking about the average person in the street who has been caught unawares. We are talking about those who, almost invariably, took advice—whether the advice was appropriate or not, we do not know, because it depends on what the accountant told them. There would have been some predictability and certainty from what they were told by their accountant. It is somewhat dodgy of the right hon. Member for East Yorkshire to pray in aid statements made by accountants to the Select Committee about legal matters.

Eric Forth: What comment does the hon. Gentleman have about those modest-income people who took advice to go into self-invested personal pensions and who have now had their fingers badly burned as a result of the Chancellor letting them down?

Rob Marris: I am glad that the right hon. Gentleman raised that issue, as I was just about to come on to that—

Eric Forth: No, the hon. Gentleman was not.

Rob Marris: It is written in my notes. Does the right hon. Gentleman wish to see it? He can probably read it from where he is sitting—SIPPs is on the second line down.

Eric Forth: I believe the hon. Gentleman.

Rob Marris: I am glad that the right hon. Gentleman believes me.
	The right hon. Gentleman referred to people of modest means. I suspect that his definition of modest means is slightly different from mine. It is right, however, to discuss SIPPs in this context. The Government listened to the considerable representations made on SIPPs and changed their approach in the pre-Budget report. That might appear to be a contradiction to some Members, but I do not think that it is. To me, the underlying theme is that if one has modest means—I would say that they were considerable means in terms of what is dealt with in this Bill, and in terms of SIPPs and second homes—getting involved in such tax avoidance measures is dodgy until the law is passed.
	In the statement that my right hon. Friend the Paymaster General made on 2 December 2004, she included a statement of intent that she and the Treasury team wished to be put into United Kingdom legislation. That was not government by fiat. If it were, we would not be here, because we would not have a Bill in front of us. My right hon. Friend would have introduced the changes by fiat from 2 December 2004. I would have objected strongly. From what I know of her, there is no way that she would ever wish to govern by fiat. The matter would rightly come before the House, as it has done today. To suggest that this is government by fiat, which brings in all the arguments about the Magna Carta, takes us off track.
	I echo what the right hon. Member for East Yorkshire said about amendment No. 6. Were it to be passed, it would make things worse in terms of what the right hon. Member for Bromley and Chislehurst (Mr. Forth), as I understand his view, appears to want to happen. On amendment No. 16, tabled by the hon. Member for Christchurch, either he and other Members who keep using the word "principle" have a principle on retrospectivity or they do not. We cannot have half a principle going back to 11 October this year, but not going back to 2 December 2004. Either one can envisage that retrospectivity, as I do, going back to a ministerial statement that is yet to be enacted but will be enacted if the Bill is passed, or one cannot. What he said about a convention in relation to Finance Bills seems to undermine his position. Either he has a principle or he does not.

Christopher Chope: Surely the principle is knowing what the situation is. On 11 October, the Bill was published and anybody could see its content. When the Paymaster General made her statement on 2 December last year, however, the situation was opaque in the extreme.

Rob Marris: That is a helpful intervention, because my right hon. Friend the Paymaster General and I differ from the hon. Gentleman on whether the written ministerial statement of 2 December 2004 was opaque. I do not think that it was, and my right hon. Friend has made it very clear to the House that she does not think that it was. I accept that the accountancy body to which the hon. Gentleman has twice referred said that it was not quite clear, but I do not think that it was opaque. I think that it said, "Watch out if you're trying to get involved in some strange tax avoidance scheme. We have clamped down on them in the past and we are going to clamp down in the future." My right hon. Friend put out a kind of caveat-avoider warning on 2 December 2004.
	The hon. Member for Christchurch made a point about his amendment No. 19 and the Henry VIII clause. The amendment proposes the removal of new section 4C(3), which the hon. Gentleman said was retrospective. When I intervened on the right hon. Member for Bromley and Chislehurst earlier, I quoted subsection (3)(a) to demonstrate that it was not retrospective. I realise that the hon. Gentleman has worries about retrospectivity, but he seems to be interpreting the phrase in brackets in subsection (3)(a) differently from me. There is retrospectivity in the Bill, but I do not think there is any in subsection (3).

Christopher Chope: The hon. Gentleman is a distinguished lawyer, but surely if his interpretation were correct, the subsection would read "modifying any provision of any enactment passed after the commencement day", without the restriction to
	"this Act and any enactment passed . . . after the commencement day".
	Surely it is retrospective in that regard.

Rob Marris: The hon. Gentleman and I differ, in that I do not agree that it is retrospective, but I understand his interpretation and I hope that my right hon. Friend the Paymaster General will clarify the wording.
	I take the hon. Gentleman's point about economic well-being, but I think he rather over-egged his case. He referred to a projected Government deficit of £151 billion over the next five years, and contrasted it with the sum of £95 million. With due respect, he inadvertently did not present a true picture. The £95 million is the projected increase in tax revenue for 2004–05 as a result of the Bill. According to the regulatory impact assessment, thereafter it will be £240 million a year. In round terms, if the £240 million continued for the whole five years, the total would be more than £1 billion. I appreciate that £1 billion is about two thirds of 1 per cent. of £151 billion, but the comparison is not quite as extreme as the hon. Gentleman suggested.
	Amendment No. 5 proposes the removal of new section 4B(4) in clause 1. Will my right hon. Friend explain what the subsection means? As I said earlier, I think that if it were removed, the effect would not be what the right hon. Member for Bromley and Chislehurst wants, but I may have misunderstood. If I may use the word employed by the hon. Member for Christchurch, the subsection is slightly "opaque". I hope that my right hon. Friend will explain it, and why she wants it to remain—as I imagine she does.

Dawn Primarolo: rose—

Mr. Deputy Speaker: Order. It might make for a better debate if the hon. Member for Fareham (Mr. Hoban) spoke at this point, before the Paymaster General winds up the debate.

Mark Hoban: The amendments deal mainly with the retrospective nature of the Bill, a topic that was considered both on Second Reading and in Committee. It is right for it to receive full and proper attention on Report as well, given the importance of retrospection in the context of tax. As has been pointed out a couple of times, when our party were in government, retrospection was used on occasion to tackle tax avoidance, but that should not create a precedent. It should not mean that measures containing an element of retrospection should go unchallenged. I welcome the amendments in that context, as they urge the Treasury to justify certain parts of the Bill.
	I share the uncertainty of the hon. Member for Wolverhampton, South-West (Rob Marris) about the precise meaning of the wording. I suspect that it boils down to the fact that the Bill follows anti-avoidance measures enacted in respect of other taxes. As I have said, one problem is that NICs and other taxes are dealt with by different Acts, so changes need to be enacted separately. It still has some retrospective provisions and I want to make some general comments about retrospection in response to amendment No. 16, proposed by my hon. Friend the Member for Christchurch (Mr. Chope).
	I join other hon. Members in chiding my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) on amendment No. 6. I fear that it creates a position whereby, if the rest of the Bill goes through unamended, the removal of the specific provision would enable retrospection right back to the initial introduction of national insurance contributions.

Rob Marris: The Magna Carta.

Mark Hoban: The hon. Gentleman shouts out "the Magna Carta", but I am not entirely sure that national insurance was even thought of when that document was drawn up.
	Amendment No. 6 would, as explained in paragraph 20 of the explanatory notes, remove the limitation whereby the backdating applies to 2 December 2004.
	Amendment No. 16 brings out one of the key issues relating to retrospection. It is designed to put back into the Bill a particular date from which retrospection can start—11 October 2005. My hon. Friend the Member for Christchurch and other hon. Members have already referred to the surprise of those who follow these matters closely outside this place about the Bill's relation to the Paymaster General's statement of 2 December 2004. We had a brief exchange on that matter earlier. In tax representation document 53/05, the Institute of Chartered Accountants said:
	"We do not think that anyone reading the Paymaster General's 2 December 2004 Statement could have expected the content of this Bill."
	In view of that surprise, it may be reasonable to move the date forward to 11 October 2004.
	In the same paragraph of the representation, the Institute of Chartered Accountants expresses, albeit somewhat less eloquently, the sentiments of my hon. Friend the Member for Braintree (Mr. Newmark) in speaking about Adam Smith. It cites passages from the European case "Stichting Goed Wonen". Paragraph 32 states:
	"The principles of the protection of legitimate expectation and legal certainty form a part of the Community legal order. They must accordingly be observed . . . by Member States".
	And paragraph 33 states:
	"Although in general the principle of legal certainty precludes a Community measure from taking effect from a point in time before its publication, it may exceptionally be otherwise where the purpose to be achieved so demands and where the legitimate expectations of those concerned are duly respected".
	I suspect that the Institute of Chartered Accountants was surprised on reading paragraph 33 and felt that its legitimate expectations had not been respected. The principles of paragraph 32, it probably thought, should apply—that people should have legitimate expectations and be able to rely on legal certainty.
	People have asked how that differs from the Rees rules that were set out in the Finance Act 1978, to which my hon. Friend the Member for Christchurch referred. It reminds me of further comments from the accountancy profession. I do not want to go into all the Rees rules again, but I would draw attention to the first of the four:
	"First, the warning must be precise in form. A mere suggestion that there are vague schemes of tax avoidance that must be countered should not suffice".
	It is the generalised nature of the Paymaster General's statement of 2 December 2004, that leads people to ask whether the first Rees rule principle has been met. The Paymaster General was explicit in saying earlier that it had been met, but others feel that it has not. That poses the question of how people should have reacted to that statement. Is it perhaps more appropriate to start the period of retrospection from 11 October 2005, when the Bill was published, and to thereby present clearly to advisers, professionals and others interested in tax matters the nature of the Government's concerns? That is the issue that we have been debating through this group of amendments and it is important to the principle of retrospection. People are looking for clarity and certainty, which the Paymaster General's statement of December 2004 perhaps did not possess in the eyes of some. I would welcome her comments on that and on other aspects of retrospection.
	Through amendment No. 18, my right hon. Friend the Member for East Yorkshire (Mr. Knight) seeks to amend just one line in clause 1, but leaves untouched other payments that are themselves linked to national insurance contributions. If his amendment is accepted, another one should be tabled and accepted to bring all contributions and payments into line with each other, instead of singling out statutory payments.
	Given that there is another group of amendments that we want to discuss later, I will conclude my remarks and look to the Paymaster General to be much clearer about the issue of retrospection and how it fits in with the Rees rules set out in the Finance Act 1978.

Dawn Primarolo: Conservative Members quote the Rees rules but I am not sure that they understand exactly how they are implemented. I remind them that HMRC issued a detailed technical note on the day of the pre-Budget report that made it clear that contrived and complex avoidance schemes were being closed down. Draft legislation was issued shortly afterward and comments on the technical detail were invited. The reference in the regulatory impact assessment to which the hon. Member for Christchurch (Mr. Chope) drew attention relates to the disclosure rules, not to the retrospective aspect.
	Given that we are dealing with inconsistencies, I should point out that one minute Conservative Members claim that nobody understood the meaning of the statement of 2 December 2004, yet the next they pray in aid accountants' and accountancy firms' explanations—given in December 2004—of their understanding of the statement's meaning. Let me give Conservative Members three helpful quotations from the people at PricewaterhouseCoopers, as provided by John Whiting. The first states:
	"we recognise the problem that the Government is trying to tackle by taking this unusual power."
	So the people at PricewaterhouseCoopers know what we are dealing with. They continue by saying that they
	"congratulate those responsible for . . . this Bill"
	and for
	"the package of explanatory notes and frequently asked questions that accompany it and (seemingly) the potential for proper time to debate it"
	on the Floor of the House and in Committee. The third quote is probably the most important:
	"the first use of powers in this area will be to bring in NIC regulations to parallel the charges imposed by Schedule 2 F(2)A 2005 in the employee securities area. There can be no objection to this".
	So the idea that people do not understand the very precise way in which the Government are approaching this issue—

Michael Fallon: Will the Paymaster General give way?

Dawn Primarolo: No, I will not, if the hon. Gentleman does not mind. He has not been here for all of this very long debate, and in the few remaining moments I want to reply to the amendments of the right hon. Member for Bromley and Chislehurst (Mr. Forth).
	So the idea that people could not comprehend this measure or that they did not have sufficient details from the Government is a misunderstanding on the part of Conservative Members. The confusion, moreover, is perpetuated in the amendments, which seek to do lots of different things and contradict—[Interruption.] Yes, I suppose that it is a case of betting both ends against the middle.
	Amendment No. 5 would have the effect that regulations made under the provisions in the Bill could apply only to tax measures made after the Bill had been passed. Clearly, that would undermine the deterrent effect of the statement of 2 December 2004, and put at risk national insurance yield of £95 million in 2004–05. I disagree with the hon. Member for Christchurch, as I do not think that that is an insubstantial sum. It could also put at risk all the 2005–06 yield of £240 million, as the end-of-year bonus season could escape liability for national insurance.
	Amendment No. 5 would also produce an anomalous result between tax and national insurance. The Opposition spoke about human rights challenges, but the amendment would mean that people using an avoidance scheme that gets caught by any of the tax provisions having effect from 2 December 2004 would have to pay back their income tax liabilities, but not their national insurance liabilities.
	Amendments Nos. 6 and 20 would increase uncertainty. Ironically, or perhaps deliberately, they would contradict amendments Nos. 5 and 16. They would remove proposed new section 4B(5), which specifies that regulations cannot have effect before 2 December 2004. The amendment would therefore extend the scope of retrospection, and mean that there would be no limit on how far back Ministers or regulations could go. I am sure that Opposition Members would not want that.
	Amendment No. 16, like amendment No. 5, would undermine the deterrent effect of the 2 December 2004 statement. As I described earlier, it would put at risk substantial amounts of revenue, as bonuses paid through the contrived schemes could escape the national insurance liability if the operative date for the regulations were 11 October 2005. That would produce another anomalous result: tax would be collected through a scheme whose purpose was considered to be avoidance, but the national insurance liability under the same scheme would not be collected. Frankly, that would be an unreasonable—to put it politely—use of legislation.
	Amendment No. 19 would restrict the scope of regulations that may be made for modifying any provision of any enactment for the purposes specified in proposed new section 4C(2). That would mean that the regulations could not amend primary legislation, so that where such legislation deals with matters in 4C(2)—such as contributions, contributory benefits and pension scheme matters—it could not be amended, even where not to amend it would be to the detriment of employees. The current arrangement is to allow such amendments where that is fair to employees and ensures that they receive their entitlement as a result of a change of national insurance liability.
	Amendment No. 9 is unnecessary, and frankly unwise. It would omit proposed new section 4C(5)(g), which enables regulations to be laid that will redetermine matters to the benefit of contributors. Without that provision, it is possible that increased entitlements that arise from retrospective legislation will be denied by virtue of a previous determination. That is, when people are deemed to be required to pay national insurance, that will affect their entitlement to contributory benefits. The amendment would prevent increased benefit entitlement being assigned to those individuals.
	I shall deal briefly with amendment No. 18, which addresses the Bill's impact on the provision of statutory payments, such as maternity, paternity, adoption and sick pay. Retrospective regulations made under the powers in the Bill could have an effect on entitlement to those statutory payments. Eligibility for statutory payments is based in part on the employee's average weekly earnings assessed over a specified calculation period. As a result of an avoidance scheme an employee may therefore receive less than they may have been entitled to if they had paid the correct amount instead of the lower amount. The amendment would prevent the employee from receiving that additional payment.
	I think that the right hon. Member for East Yorkshire (Mr. Knight) thought that the Bill prevented the restoration of those statutory payments, whereas it is the amendment that does the damage. The Bill provides for that to happen. Therefore I urge hon. Members to reject amendments Nos. 5, 6, 16, 19, 20 and 9. They undermine the deterrent effect of the 2 December 2004 statement, increase uncertainty for employers, are detrimental to employees and will put at risk a substantial amount of national insurance money that is due to the national insurance fund. If the amendment is put to the vote, I urge my hon. Friends to vote against it.

Eric Forth: At least we have got the Minister to come to the House and give explanations, for which we are grateful. That surely is one of the objectives of this part of our proceedings and I look forward to many more such prolonged examinations of Bills at this crucial Report stage.
	Mainly because I want to give my right hon. Friend the Member for East Yorkshire (Mr. Knight) an opportunity to move the next group of amendments, I reluctantly beg to ask leave to withdraw the amendment.
	Amendment, by leave, withdrawn.

Clause 7
	 — 
	Disclosure of Contributions Avoidance Arrangments

Greg Knight: I beg to move amendment No. 21, in page 14, line 22,leave out
	'main benefit, or one of the main benefits'
	and insert 'only benefit'.

Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments:
	No. 22, in page 14 , leave out lines 42 to 47.
	No. 23, in page 14, line 44, after 'information' insert
	'(whether or not obtained from a person entitled to practise as a barrister, solicitor or advocate within England and Wales, Scotland or Northern Ireland)'.

Greg Knight: I will speak to amendments Nos. 21 and 23, but leave my hon. Friend the Member for Christchurch (Mr. Chope) to address his amendment No. 22.
	Amendment No. 21 seeks to narrow the scope of what amounts to a notifiable contribution arrangement from the near catch-all definition on page 14 of the Bill to a more modest, but reasonable definition, so that only where the clear and main aim is avoidance would the arrangement be a notifiable contribution arrangement. I look forward to the Paymaster General telling us why the wide definition in the Bill should be employed rather than my more reasonable, narrower definition.
	I should declare an interest as a qualified solicitor and, until recently, a practising one. Although I am no longer practising, I remain on the roll of solicitors. Amendment No. 23 deals with the confidentiality rule and seeks to clarify its scope by making it clear that confidential advice does not need to be obtained from a UK qualified barrister or solicitor or, in Scotland, an advocate because it is important to make the provision wider than it is in the Bill.
	There are in essence two parallel issues. One is the duty of confidentiality that covers almost all professional practitioners and the other is professional privilege, which must be argued before a court of law. All solicitors who hold a practising certificate and operate in England and Wales are required to abide by the Law Society's guide to the professional conduct of solicitors 1999. Rule 16 of that guide deals with a solicitor's general duty of confidentiality to his client. Rule 16.01 states:
	"A solicitor is under a duty to keep confidential to his or her firm the affairs of clients and to ensure that the staff do the same."
	There is a distinction between the duty to keep a client's affairs confidential and the concept of law, which is referred to in the Bill, known as legal professional privilege. The duty in conduct extends to all matters communicated to a solicitor by the client or on behalf of the client, with some very narrow exceptions. Legal professional privilege, however, protects communications between a client and a solicitor from being disclosed even in a court of law. Certain communications are not protected by legal professional privilege, but non-privilege communications remain subject to the solicitor's duty to keep his client's affairs confidential.
	The disclosure of a client's confidences that is unauthorised by the client or by law usually leads to disciplinary proceedings against the solicitor and could leave that solicitor or barrister—it is usually a solicitor because there is no contractual basis between a client and a barrister—liable, in certain circumstances, to civil court proceedings that arise from the misuse of confidential information. So the duty of confidentiality applies to information about a client's affairs irrespective of the source of the information, and it continues despite the end of the retainer or, indeed, the client's death, when that right passes to the deceased's personal representatives.
	Solicitors must be very careful. Even when a solicitor sends a postcard to acknowledge the receipt of a communication, care must be taken to ensure that no confidential information appears on it. The Law Society rightly regards the duty of confidentiality as fundamental to the relationship of the solicitor and the client. It exists both as an obligation in law, having regard to the nature of the contract, and as a matter of professional conduct. All the information discovered by a solicitor in the course of his retainer is confidential. Whether the information is also subject to privilege is a separate legal issue, about which I shall go into detail in a moment.
	The circumstances in which confidentiality can be overridden are rare indeed. A solicitor who volunteers confidential information must be prepared to showpowerful justification for breaching such confidentiality. Although it is clear that the solicitor owes that duty to the client, there are certain exceptional circumstances that override the duty. For example, a solicitor can reveal confidential information to the extent that he believes that it is necessary to prevent his client or a third party from committing a criminal act that the solicitor has reasonable grounds to believe is likely to result in serious bodily harm.
	The Law Society's rule 16.02 sets out the circumstances in which the duty of confidentiality can be overridden. I shall not go into all of them, but the duty does not apply, for example, to information acquired by a solicitor, when the solicitor himself is being used by the client to facilitate the commission of a crime or fraud, because pursuing a crime or fraud is not within the scope of a professional retainer. If the solicitor becomes suspicious about a client's activities, he can normally assess the situation in the light of what the client has to say about it and the solicitor's own professional judgment and behave accordingly. Of course, in certain circumstances, the client himself may give express consent to the passing on of confidential information. In those circumstances, of course, the rule does not apply.
	Occasionally, a solicitor is asked by the police or a third party such as the Inland Revenue—so this is relevant to the Bill—to give information or to show documents that the solicitor has obtained when acting for a client. Unless the client is prepared to waive confidentiality or the solicitor has evidence that a crime is taking place, the Law Society advises lawyers to insist on receiving a summons, usually a witness summons, or a subpoena, so that when those circumstances arise the lawyer can claim privilege before the court and ask the court to decide the issue.
	The Inland Revenue asks solicitors to disclose documents and information on numerous occasions. In such circumstances, it is pretty clear that solicitors are protected. However, the Bill does not make it clear what will happen if a client employs someone who is a solicitor in France, Spain, or any of our EU partner countries, rather than a solicitor who is qualified under English law. The Law Society's international unit is clear about the matter because it has published guidance that states that overseas lawyers who operate in England and Wales, or who have offices and provide legal services in England and Wales, are expected to observe the same standards as UK-based solicitors. The rules of conduct cover such an eventuality, but I am not sure whether the Bill does. Could the Inland Revenue argue that, because a person under investigation had employed an overseas lawyer, that lawyer should not have the right to claim privilege on behalf of his client? I hope that the Minister agrees that privilege and the right to claim it should remain in such circumstances.
	Accountants are under a professional duty in a similar way to solicitors. They have been issued with guidance informing them that they should not disclose information to third parties.

Peter Bone: I declare an interest as a chartered account, although I have not practised in public for many years. I am surprised that the Bill contains no reference to chartered accountants or the accountancy profession. Will my right hon. Friend give me some guidance on that?

Greg Knight: My hon. Friend makes an interesting point. I would like to know whether the Minister thinks that proposed new section 132A(6) to the Social Security Administration Act 1992 would cover accountants. The provision includes a reference to "legal professional privilege", but having never practised as an accountant, I do not know whether accountants would fall under that definition or be covered by the Bill.
	There is an overwhelming case for allowing anyone who gives confidential advice to ensure that that advice and the papers associated with it remain confidential, even if that person is not legally qualified. Some years ago I employed a young girl called Jane Oakes. She wanted to be a solicitor, but during her employment with me and while she was taking her studies, she was not legally qualified. However, she was an expert on certain areas of law. Information such as that which she obtained when advising a client on her area of expertise, even though she was not legally qualified at the time, should be protected under the Bill and the general provisions on client-lawyer confidentiality.
	Legal privilege can provide a defence for a professional legal adviser to a charge of failing to report suspicions of money laundering, but that applies only if the information is received in privileged circumstances and is not communicated to the lawyer with the intention of furthering a criminal purpose. However—this might answer the point made by my hon. Friend the Member for Wellingborough (Mr. Bone)—there is no specific provision in money laundering legislation or the Bill to provide the same protection to accountants. I do not think that accountants generally have the same protection as lawyers when they give advice, although a legally qualified person who advises his employer can claim the defence.
	I understand that, so far as money laundering is concerned, at the time the initial guidance was issued, discussions were under way between Ministers and interested parties about how legal privilege could be interpreted. Will the Minister, when she speaks on Third Reading, tell us whether she has had any discussions on the scope of privilege? It is a crucial point for many of us who will have to decide, during the Third Reading debate, whether we want to support the Bill or divide the House.
	It being Five o'clock, Mr. Deputy Speaker, pursuant to Order [27 October], brought proceedings on consideration of the Bill to a conclusion.
	Bill reported, without amendment.
	Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, signified.]

Dawn Primarolo: I beg to move, That the Bill be now read the Third time.
	We have reached the final stage of the House's deliberations on the Bill and I would like to reiterate to the House the purpose of the Bill. It demonstrates the Government's continuing commitment to take action against tax and national insurance avoidance on rewards of employment and to close down avoidance in that area for good. The Bill is key to achieving the Treasury and Government's objectives of fairness and opportunity by ensuring that all pay the correct amount of tax and national insurance that the House has already decided. It is an essential element in building a serious and credible deterrent against future avoidance activity and it is needed to secure total tax and national insurance yields of £200 million in 2004–05 and £500 million per annum thereafter.
	As the income tax disclosure provisions have demonstrated, it is not possible to anticipate the range and complexity of the extremely contrived avoidance arrangements that the Bill seeks to address. The powers in the Bill will enable the Government to deal effectively with any tax and national insurance avoidance arrangements that emerge in future that are designed to frustrate its intention that employers and employees should pay the proper amount of national insurance on the rewards of employment.
	I thank Members who participated in debate on the Floor of the House and in Committee. The debate has entailed a thorough scrutiny of the purpose and details of the Bill, although at times, in some contributions, its objectives got a little lost. That scrutiny included details that are to be set out in regulations.
	The hon. Member for Twickenham (Dr. Cable) said on Second Reading that
	"in terms of general principles, I broadly endorse what the Government are trying to achieve through the Bill. My colleagues and I voted for higher national insurance contributions to fund the health service, so it follows that we want such revenue to be realised".—[Official Report, 27 October 2005; Vol. 438, c. 483.]
	Unfortunately, that does not follow at all because in Standing Committee the hon. Gentleman's colleague, the hon. Member for Eastleigh (Chris Huhne), voted with Opposition Members on an amendment that would have removed the deterrent effect of the Bill. He accused the Government, and said:
	"We are doing some violence to an underlying principle"—
	a principle that the hon. Member for Twickenham agreed with. He continued:
	"The amount of tax revenue at issue should be very great to justify our doing that violence."—[Official Report, Standing Committee D, 15 November 2005; c. 9.]
	I do not agree with the choice of words of the hon. Member for Eastleigh, and I am not sure what the Liberal Democrats now count as a substantial amount of revenue, but I think that £200 million, rising to £500 million, comes into that category. The arguments put forward have been supported by the hon. Member for Twickenham, and it would be good if he ensured some consistency from his party.
	Over many years, we have seen a minority of employers—it is only a minority, but they happen to be very wealthy—using highly sophisticated tax advice to sidestep the intention of anti-avoidance legislation passed by this House, ranging from 1998 up to the Finance Act 2005. Despite legislation effective from the date of announcement, they have managed to continue to avoid paying the amount of tax and national insurance that is properly due. They do so because new contrived schemes can be devised quickly and used when legislation closing existing schemes is announced. With that approach, the revenue remains very much at risk, even in the short term unfortunately, because employers still have scope to adopt another scheme and get away with avoidance.
	The Government's intention is to shut down such activity permanently. To do so, we have to undermine fundamentally the incentives for employers repeatedly to seek out new contrived schemes contrary to the intention of Parliament. The Bill is intended to deter future avoidance by providing a power to backdate a national insurance liability to 2 December 2004 if necessary. With such backdating, there is little point in employers and their advisers looking for a new loophole because the national insurance will still become due. The Government hope that we will not need to legislate because employers will finally get the message.
	Any amendment that had the effect of removing our ability to make regulations imposing a backdated national insurance charge to a date before the announcement would remove the deterrent effect of the Bill and put all the revenue captured by those arrangements at risk. We have discussed that repeatedly, on Second Reading, in Committee and today, and I have repeatedly reassured Members that there are numerous examples of contrived schemes that the Government have had to deal with since 1997 and that the previous Government also had to tackle. They include contrived schemes involving employee benefit trusts, soft currency loans, such as those denominated in Turkish lira, adjustable options and special purpose vehicles. That will continue unless the Government take action.
	The power to make regulations altering liability is restricted to reflecting, as far as possible, employment remuneration measures in tax legislation—normally Finance Acts—that have been backdated. The provisions would already have been discussed during a Finance Bill, before national insurance triggers action, and would be only to reflect anti-avoidance measures. Where such regulations are made, the House will already have had the chance to consider any relevant human rights issues on backdated tax legislation during the passage of the relevant Finance Bill or other legislation.
	In addition, the Government will publish the draft national insurance regulations a minimum of 12 weeks before they are made, so that employers and their representatives have every opportunity to comment on the content of any proposed national insurance charge. Where possible, backdated draft regulations will be published no later than when the corresponding tax provisions are discussed in the Standing Committee of the Finance Bill. Both will be available at the same time, so that Members can see how they fit together. Furthermore, to ensure that there is adequate parliamentary scrutiny when regulations are made that create a backdated national insurance liability, such regulations will be subject to the affirmative resolution procedure.
	I am pleased to be able to conclude that the Bill has had thorough scrutiny in the House. I have listened carefully to the constructive contributions from Members of all the parties involved in the discussions and I thank them for their participation.
	I commend the Bill to the House.

Mark Hoban: At the outset, may I thank my hon. Friend the Member for Cities of London and Westminster (Mr. Field) for his role in scrutinising the Bill in Committee? It was not an onerous Committee, but he and my hon. Friends made great progress in asking detailed questions of the Paymaster General. I am therefore grateful for his work on the Bill. As the Paymaster General said on Report, this is my first opportunity to speak on tax matters as a Front-Bench spokesman. I am a chartered accountant, albeit a non-practising one—I except, of course, my annual struggle with my tax return—and I look forward to engaging in constructive debate on tax with the Treasury. I believe that the hon. Member for Hartlepool (Mr. Wright) is a chartered accountant, and he, too, will wish to make a contribution to our debates.
	For the benefit of Members who are new to the Bill, including my right hon. and hon. Friends who participated in our debates on Report, may I reflect why the Bill is needed? The Paymaster General referred to avoidance issues, but a separate Bill on national insurance is needed because of the way in which national insurance and other taxes are administered. The Bill makes additional provisions to the Social Security Contributions and Benefits Act 1992. Before 1999, national insurance contributions were managed by the Department of Social Security. Since then, they have been managed by the Treasury. Until national insurance was brought within the Treasury's remit, the national insurance and the income tax systems were often out of sync, and it took some time for national insurance to catch up with changes in income tax. Indeed, at one point, the Treasury and the DSS announced wildly differing approaches to the taxation of share options within weeks of each other. At least the Bill tries to manage those processes and bring them together.
	The Bill has two principal objectives—first, to apply disclosure arrangements in the Finance Act 2004 for taxes other than national insurance to national insurance itself, and, secondly, to create the opportunity to levy retrospectively additional or new national insurance charges in cases in which the Government believe that schemes have been contrived to avoid national insurance. As the explanatory notes acknowledge, that is a first for national insurance:
	"Existing NICs legislation does not allow regulations to be made which can take effect that far back."
	That captures the flavour of our earlier debate on retrospection. I wish to highlight three issues that have been raised in debates on the Bill: retrospection; the breadth of the Bill and the problems that that has caused; and the delay between the introduction of primary and secondary legislation, and the comments that the Paymaster General made about the subject.
	On retrospection, we have debated the Paymaster General's statement in December 2004 and the issues that arise from it. There are concerns about retrospection, but I do not want to reopen the wounds that were exposed on Report. The Institute of Chartered Accountants, in a letter from the tax faculty to the Paymaster General in February this year, highlighted three issues, including, first, the test of certainty and the fact that taxpayers should be aware of how much tax they pay. They are entitled to expect that they will be taxed in accordance with the law in force at the time of the relevant transaction. Retrospection undermines those expectations of certainty. Secondly, the institute considered the legal basis of retrospection and the way in which it sits in the wider context of EU and human rights law. Looking at emerging EU case law, it said that
	"the state cannot retrospectively remove a right without a transitional period".
	The Bill does not, as far as I am aware, provide a transitional period for the removal of a right. The test of the Bill, therefore, may not be in the House but in the courts.
	The third issue raised was the potential of retrospective legislation to undermine the credibility of the UK tax system in the eyes of UK taxpayers. The Institute of Chartered Accountants rightly observes that by and large the UK tax system has a high degree of credibility, the tax rules are obeyed, and taxpayer compliance and honesty are good. If we introduce increased uncertainty into the tax system by greater use of retrospection, the predictability and certainty that is such a feature of the UK tax regime will start to diminish, perhaps leading to concern on the part of international employers. If they come to the UK and site operations here, will they find the tax regime changing without prior warning? We need to bear in mind those three aspects when we consider retrospection and its impact on the overall tax environment in which we work.
	A further concern about retrospection is its impact on the law-making process. If retrospection on a wide scale becomes institutionalised, will law making become lax? If the Revenue thinks that it can have a second bite at the cherry by using retrospection to correct mistakes that it has made in drafting legislation, will that create an environment in which the Revenue takes less care in drafting the original legislation? I am sure the Treasury and Her Majesty's Revenue and Customs will not see retrospection as a way of taking a more relaxed approach to drafting legislation. On the whole they are diligent in drafting legislation and we want that to continue.
	We discussed today the breadth of powers in the Bill. I remarked earlier that tax advisers were surprised at the content of the Bill and the breadth of the measure. In its report on the 2004 pre-Budget report the Treasury Committee, commenting on the Paymaster General's statement on 2 December 2004, stated:
	"The indication in this statement that the Government will continue to announce proposed legislation, effective from the day of the announcement, to stop schemes which come to their attention is nothing new."
	Indeed, we touched upon the Rees rules, which relate to that. The Treasury Committee went on:
	"What is new is the declaration that future schemes, not yet devised or which have not yet come to the Inland Revenue's attention, may be stopped as from 2 December 2004. This amounts to a general anti-avoidance rule in this area of taxation of income and rewards, although no new powers are being taken by government."
	So, in the Committee's view, the very thing that the Government had backed away from—introducing their disclosure rules in the Finance Act 2004—because of criticism from the tax law review committee at the Institute for Fiscal Studies and comments from the Chartered Institute of Taxation, they seemed to have backed towards. We need to look again at how the legislation works.
	The Paymaster General spoke of the importance of making sure that the proper or right amount of tax is paid. In seeking to extract that, how do the Government distinguish between planning, mitigation and avoidance? There is a spectrum. If people are following the law, at what point do the Government intervene to tackle avoidance issues? We will need to consider that. The Paymaster General referred to the process for scrutinising secondary legislation, and that may give us the opportunity to do so in Committee when those statutory instruments are laid. Taxpayers have a right to expect that the tax law on the day on which they undertake a transaction will continue to apply to that transaction going forward.
	The third and final issue that I shall comment on is the delay between primary and secondary legislation. Primary legislation tackles the PAYE and income tax aspects of a contrived scheme. Under the Bill the consequent national insurance secondary legislation can come forward so that amendments made to income tax legislation to close down avoidance schemes can be used in national insurance legislation to close down similar loopholes.

Rob Marris: Is the hon. Gentleman suggesting that he favours a move to a portmanteau Finance Bill that covers national insurance, because national insurance is no longer the responsibility of the Department of Social Security, which is now the Department for Work and Pensions, or is he content to continue with dual-track Bills—Finance Bills and national insurance Bills?

Mark Hoban: As ever, the hon. Gentleman has made a pertinent and thought-provoking point. Some have suggested that national insurance and pay-as-you-earn are coming closer and closer together and that a distinction should not be drawn between PAYE and national insurance as a way of funding contributory benefits. I am not sure whether PAYE and national insurance should come together. My hon. Friend the Member for Tatton (Mr. Osborne) has set up a commission under the chairmanship of Lord Forsyth to review the tax system. It will consider simpler taxes and may examine that area, on which I do not want to comment today.
	The delay between primary and secondary legislation relates to my earlier point about the different origin of national insurance contributions, and national insurance has taken some time to catch up since its management by a separate Department. The Bill allows for a 12-month delay between primary legislation and statutory instruments coming into force.

Dawn Primarolo: The Bill does not allow for a 12-month delay—it says that statutory instruments must come into force within 12 months, which is quite different.

Mark Hoban: The secondary legislation may be delayed for up to 12 months, although it does not have to be delayed for that period. I am grateful for the Paymaster General's clarification that it may be delayed for up to 12 months.
	The Bill also allows statutory instruments to come into effect 12 months before they are laid. I know that that issue was raised in Standing Committee by my hon. Friends, so I am grateful for the Paymaster General's reassurance, first, that such statutory instruments will be subject to the affirmative resolution procedure and, secondly, that she will work to ensure that all the regulations relating to the closure of schemes both for PAYE and national insurance will be published at the same time. I am sure that those who take an interest in such matters will welcome that assurance, because it will make scrutiny far easier.
	Retrospection has concerned us during many debates on the Bill. There is a concern that it may become widespread and institutionalised, and its use raises several issues. We must ensure that such measures do not become institutionalised, so that the quality, credibility and predictability of our tax system is not undermined.

Vincent Cable: There are important elements of consensus and agreement on the Bill, but there are also some elements of disagreement, and the Paymaster General has obviously found it difficult to get her head around the fact that we take that nuanced view.
	On consensus, I shall repeat the point that I made on Second Reading, which the Paymaster General has already quoted—the Government should take reasonable steps to stop people creating complex tax avoidance schemes, in this case in relation to national insurance, which is obviously right because of general revenue concerns. We supported increased national insurance contributions to fund the health service, and we do not resile from that. The measure is also obviously right given the general principle of fairness—most of us pay our dues, and it must be right for the Treasury and the Inland Revenue to act against those who do not.
	The problem, which Liberal Democrat and Conservative Members have expressed, concerns the general principle of retrospective legislation. Again, that principle is not absolute, because, as the Minister has said, retrospective action has been taken in the past on tax matters—it is part of history. As the European Court of Justice has stated—I have quoted it today, and I quoted it on Second Reading—there are certain cases in which it is proper to apply retrospective measures, so we are not dealing absolute moral principles.
	However, we need to take account of the concerns that have been expressed. The Institute of Chartered Accountants is not in the business of promoting the interests of fat cats but of preserving the basic principles of tax law and maintaining its fundamental integrity. It has raised serious worries about this aspect of the Bill, and it is only proper that we should echo those. I would summarise the problem by saying that there are, of course, certain circumstances in which retrospective action is necessary in the tax world, but there need to be checks and balances. One of the useful amendments that was tabled was designed to achieve that, which is why we supported it.
	I have looked back at the comments by my hon. Friend the Member for Eastleigh (Chris Huhne) to which the Minister took exception. I find it difficult to see why. He was merely reiterating what I had said on Second Reading—that there are worries about the principle of retrospective action. He pressed the Minister on several occasions to give an estimate of the tax revenue that would be involved. Clearly, we need to talk about real numbers. If vast amounts of revenue are involved one takes a slightly different view of a major legal principle being challenged than one would take if it was to secure very small amounts of revenue. My hon. Friend repeatedly asked what amount was involved, and we ended up with a scale that ranged from £250 million down to nought. No estimate was produced. He therefore rightly voted for sceptical amendments criticising the application of retrospective legislation in this case.

Rob Marris: The hon. Gentleman says that the hon. Member for Eastleigh (Chris Huhne) pressed for some figures but did not get any. There are figures in the regulatory impact assessment and in the explanatory notes. I appreciate that the hon. Gentleman and his hon. Friend may not find those figures credible—that is an intellectual possibility—but his suggestion that we were given no figures surprises me.

Vincent Cable: I have merely read through the transcript of the Committee—I was not there at the time, unfortunately. There was a simple and in no sense politically loaded request for clarification of the revenue position in light of the fact that the proposals covered part of a tax year. It may well be that the answers that we were seeking were in the regulatory impact assessment and did not need any explanation or clarification from the Minister, but the exchange that I read was unsatisfactory, and that is what led to my hon. Friend speaking and voting as he did.
	My final point concerns a basic element of tax policy. We keep getting pieces of legislation that are designed to plug loopholes, and it is sometimes necessary to ask why so much avoidance takes place. Some of it must be due to the extreme and growing complexity of tax legislation. One of the most interesting contributions in the Committee was made by the right hon. Member for Birkenhead (Mr. Field), who forcefully made the point that he was discussing a Bill designed to plug a tax loophole that was in large part generated by the vast ramifications of the complexity of tax law that the Government are creating. He makes an entirely valid point. We should stress that the more complex tax legislation becomes, the greater the incentives and opportunities for tax avoidance, and the more legislation is required to deal with it.
	I reiterate my first and major point that the principle of preventing people from creating complex tax avoidance measures to avoid paying national insurance must surely be right. It is only regrettable that we have not had the necessary safeguards on the retrospective application of the legislation.

Brooks Newmark: As the Paymaster General knows, I have been involved in the process from the beginning and I have been impressed with her deft way of not answering questions. Several remain unanswered and I should like her to deal with them.
	First, does she believe that making a written statement in December 2004 was sufficient to make the proposals clear and plain to those who might be affected by them? Was her statement intended to create a precedent for other retrospective legislation?
	Secondly, will the Paymaster General give full details of just two out of the 100 schemes that she told us on Second Reading were so offensive that they should be stopped retrospectively?
	I acknowledge that retrospective tax legislation is not   a new concept but it has previously required specific   primary legislation to avoid being ultra vires. Clause 1 will allow the Treasury to pass subordinate regulations if and when needed. Does not that sound the death knell of legal certainty for tax planning purposes? Does the Paymaster General believe that the benefits of the measure outweigh the potential costs?
	Has any assessment been made of the potentially harmful consequences that the Bill might have for international businesses' decisions about whether to establish themselves in this country given what might be interpreted as an increase in the Government's use of retrospective taxation?
	The Bill should address the cause of the disease in the tax symptom, not the symptom itself. The disease is the complexity of taxation and the lack of clear response to legitimate tax planning. There is a continuum between legitimate tax planning that we all undertake and the notion that a few people are behaving illegally or illegitimately to escape their fair share of the burden of taxation. The Bill does nothing to tackle the undoubted uncertainty about the frontier of legitimate activity. The measure will compound rather than resolve the uncertainty.
	Question put and agreed to.
	Bill accordingly read the Third time, and passed.

CIVIL PARTNERSHIP

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),
	That the draft Civil Partnership Act 2004 (International Immunities and Privileges, Companies and Adoption) Order 2005, which was laid before this House on 30th November, be approved.—[Kevin Brennan.]
	Question agreed to.

ELECTORAL COMMISSION

Ordered,
	That the Motion in the name of Mr. Geoffrey Hoon relating to the Electoral Commission shall be treated as if it related to an instrument subject to the provisions of Standing Order No. 118 (Standing Committees on Delegated Legislation) in respect of which notice has been given that the instrument be approved.—[Kevin Brennan.]

SOFT DRINKS IN SCHOOLS

Motion made, and Question proposed, That this House do now adjourn.—[Kevin Brennan.]

Denis Murphy: I thank the House for allowing me the debate. I welcome the current consultations on nutrition and hydration in schools. Like many others, I was shocked by some of the ingredients that are used to feed our children through school dinners and the amount of junk food and drink available during the school day.
	I understand and applaud the need to examine closely the drinks and snacks that are available throughout the school day from tuck shops and vending machines, and to ensure where possible that those drinks and snacks are healthy and beneficial. However, I have some serious concerns about the recommendations of the school meals review panel on the drinks that should be allowed in schools and their impact on a company based in my constituency—Waters and Robsons of Morpeth, Northumberland, manufacturers of Abbey Well natural mineral waters.
	The school meals review panel recommendations on drinks are that
	"The only drinks available should be water (still or fizzy) skimmed or semi-skimmed milk, pure fruit juices, yoghurt and milk drinks with less than 10 per cent. added sugar or a combination of these (for example smoothies). There should be easy access to free, fresh, chilled drinking water".
	Waters and Robsons have worked closely with local education authorities to produce a low-calorie drink that has natural flavours, contains no artificial flavours or colours and also contains no sugar. It is sweetened with sucralose, a natural sugar alternative, which has fewer than 5 calories per 250 ml serving.
	The company has also developed a new bottle to replace canned soft drinks in vending machines, and it is on the approved list of suppliers to schools in 60 localauthority areas. That will change if the recommendations are accepted and those excellent drinks are banned from schools. How could a perfectly healthy low-calorie product, approved by the Food Standards Agency, find itself on a blacklist when it should be hydrating children and playing an important role in the fight against obesity?
	In October, my right hon. Friend the Secretary of State for Education and Skills announced at the Labour party conference that her Department was launching a new initiative to make school meals available and to ensure that they would be much more healthy. The initiative will have the support of the vast majority of parents and teachers, but to achieve that goal, low-calorie drinks need to be added to the list.
	The consultation document, "Turning the Tables", which was published on 3 October, dealt only with school meals but strongly advised that the policy be rolled out for other types of food and drink available throughout the school day. I am worried that the report was rushed out to meet the conference deadline, and was not seen by a number of members of the panel before publication. I cannot believe that all members of the panel agreed that intense sweeteners, which are being promoted by the Food Standards Agency as a healthy choice, are all bad for children.
	The only drink allowed for the purposes of hydration is plain water. While I applaud the promotion of water, I suspect that many children would prefer an alternative. If the only choice is between plain water, full fruit juice, milk or sugar-sweetened dairy drinks, the calories will pile on and children will still feel thirsty.

Philip Hollobone: I congratulate the hon. Gentleman on securing this important debate and on his speech. As someone who has served as a school governor, may I point out that many schools receive valuable income from the drinks machines in their establishments? If the machines could contain healthy drinks, schools' income would be maintained and children would be better off. That would be better than banning the machines altogether.

Denis Murphy: I am grateful to the hon. Gentleman for making that excellent point. I shall refer to that matter later.
	I am convinced that a small group of agencies is actively promoting the idea that intense sweeteners are unhealthy, even though there is no evidence to support that. In fact, the opposite would appear to be the case, as the Food Standards Agency is actively promoting them as a healthy option.
	The Health Education Trust was represented on the school meals review panel by its chief executive, who I suspect is the main opponent of the use of intense sweeteners. I understand from discussions with Waters and Robson that the HET offers its services to food and drinks producers as a consultant, giving advice on food and drinks that it feels able to endorse as suitable for schools, at a cost of £500 a day, along with £100 per brand endorsement. It also runs a healthy vending project, in which an operator must pay £500 to display the HET endorsement logo, and 5p commission on every vend through the machine.
	Interestingly, the HET endorses Volvic Touch of Fruits, which is produced by a French company and contains 11 teaspoons of sugar per litre. By any standards, that is a lot of sugar. Yet the HET told Abbey Well Foods that it would not endorse its product even if it were to reformulate it to a similar profile. When Abbey Well asked to meet the HET in order to try to understand its position, it was informed that it would have to pay the normal consultation fee prior to any such meeting. Will my hon. Friend the Minister examine the make-up of the HET to determine whether there are genuine conflicts of interest among members of the committee?
	In order to address some of the problems, the British Soft Drinks Association met the Department for Education and Skills on 23 November. I understand that little progress was made there. The DFES was unable to answer any questions relating to why intense sweeteners were excluded from the proposals, but suggested that it might be because they helped children to develop a sweet tooth. However, they were unable to supply any evidence to support that view, other than anecdotal evidence. The DFES was unable to respond, even when it was explained that the amount of sweeteners could be adjusted to meet any desired level.
	The DFES confirmed that a new panel, the school food trust, had been set up to examine rolling out the recommendations to include all food and drink in schools, including snacks and the contents of vending machines. I understand that those members of the school meals review panel who were available would be invited to sit on that panel. There are no prizes, therefore, for guessing what their recommendations might be. They are due to report in January after a six-week period, and the main role of gathering the evidence has been allocated to a director of the Compass catering group. Compass has a potentially significant financial stake in the supply of food and drinks products to schools. Perhaps it is not therefore the best choice for the role.
	The current proposals appear to rule out all carbonates and still and juice drinks, regardless of calorie or juice content. Many drinks classified as "healthy choice" by the Food Standards Agency in relation to advertising to children would also be banned. Rising concerns about calorie intake and obesity have moved the soft drinks industry into developing products to meet the demand for drinks that have less or no sugar but that continue to provide tasty refreshment and hydration.
	Consumers of all ages have responded with great enthusiasm to low-calorie drinks. Consumption of regular sweetened drinks fell from 96 litres per head in 1984 to 84 litres per head in 2004. Over the same period, low-calorie drink and bottled water consumption rose from 10 litres per head to 147 litres per head. In 2004, the share of the soft drink market held by regular sweetened drinks was 27 per cent., while low-calorie drinks had 49 per cent., bottled water had 15 per cent., and fruit juices had 9 per cent. There is a danger, therefore, that if a choice of healthy, tasty, low-calorie products is not allowed in schools, children will vote with their feet and seek potentially unhealthy products from outside school.
	In the main report, "Turning the Tables: Transforming School Food", section 10 of the recommendations states:
	"We believe our recommendations will lead to the consumption of healthier combinations of lunchtime foods by primary and secondary school children. This improved quality will clearly mean some increased costs but those costs should be set against the health and other benefits. Redressing the imbalance in children's diets will contribute towards a reduction of obesity and diseases such as tooth decay in young people. In the longer term the changes we recommend now should reduce the chances of young people suffering from various chronic diseases in later life. But more than that new standards can set the scene for holistic changes in the way young people perceive food and health, and can pave the way for wider changes in our food culture."
	I support that statement in its entirety. I am not advocating allowing high-fat, high-sugar or high-salt products. Unless we allow a wider range of healthy foods, snacks and drinks, however, more children will be tempted to buy and consume their food and drink outside school. The regulatory impact assessment released with the report recognises that children might react negatively to the proposed changes, resulting, in its own words, in the consumption of unhealthy foods outside school.
	I started my speech by applauding the efforts of the Department and I shall conclude in the same way. The initiative is excellent. It is flawed, however, in not allowing a wider range of healthy options to be available throughout the school day. There is nothing wrong with tuck shops and vending machines in schools, provided that the school sets the standards for the products available. As the hon. Member for Kettering (Mr. Hollobone) mentioned, for many schools it is a useful form of extra income. Sixteen per cent. of two to 15-year-olds in the United Kingdom are obese, and the figure is much higher in some areas. To help fight that rising problem, low-calorie products from an approved list should be allowed.
	Will my hon. Friend address the following questions? Will he allow a member of the Food Standards Agency to become a member of the advisory committee? How will he ensure that there is no conflict of interest for anyone sitting on the advisory committee? Will he make public the evidence used by the advisory committee for rejecting any ingredient? I realise, of course, that there are a number of genuine fears about the use of some artificial sweeteners, and it could be an ideal time, when we are considering food and drink in schools, to widen the debate on this issue.
	However, the drinks that are currently supplied to 60 local education authorities and manufactured in my constituency are those with which I am concerned today. Abbey Well drinks contain no artificial colours or flavours, are made with natural mineral water and are sweetened with sucralose, which has the same profile as sugar but with only five calories per serving. The average consumption of between 40 and 120 cases a week in each secondary school that the company supplies demonstrates that such products are both popular and beneficial, and I urge my hon. Friend to ensure that they continue to be consumed in schools.

John Healey: I congratulate my hon. Friend the Member for Wansbeck (Mr. Murphy) on securing the debate. It is an unexpected pleasure to join him and respond on behalf of the Government, with my friend and colleague the Under-Secretary of State for Education and Skills, my hon. Friend the. Member for Corby (Phil Hope), sitting beside me.
	My hon. Friend the Member for Wansbeck presented his case in typical fashion. He is a good and committed local MP, and he championed the interests of a company in his constituency. His description of that company's innovatory approach, its range of products and its success in securing important contracts throughout the country was impressive, and I understand his concerns.
	My hon. Friend mentioned the panel and its report. As he probably knows, the recommendations are out for consultation. The consultation will continue until the end of the month, and obviously no decisions have yet been made. I know that my hon. Friend the Under-Secretary will take account of what has been said this evening for the purposes of the consultation, and that others in his Department will read the report of the debate. In particular, I can reassure my hon. Friend that what he said about the advisory committee will be considered.
	My hon. Friend is plainly as committed as the Government to meeting children's need for healthy food as an essential part of their learning and development. We all share an interest in children's health, diet and development. We have heard reports that our children's diet contains far too much fat, salt and sugar, and that obesity levels are rising as a result. In 2002, one in five boys and one in four girls in the United Kingdom were categorised as either overweight or obese, and according to experts the situation will deteriorate further unless we take significant action.

Adam Afriyie: Will the Minister give way?

John Healey: I will, although it is normal practice to seek the permission of the Member who has secured the debate as well as the Minister before intervening in an Adjournment debate.

Mr. Deputy Speaker: Order. That is not strictly true of interventions. It normally applies to major contributions to Adjournment debates. In any event, as we have time in hand, the normal customs do not apply on this occasion.

John Healey: I am grateful for your advice, Mr. Deputy Speaker. I will give way.

Adam Afriyie: I thank the Minister and the hon. Member for Wansbeck (Mr. Murphy).
	The Coca-Cola company is based in my constituency. I agree with the hon. Gentleman that major drinks manufacturers of that kind can play a major part in the campaign for healthier, lower-calorie, vitamin-enriched drinks in schools. Indeed, many are eager to do so. I hope that the Minister will bear that in mind.

John Healey: The established industry is beginning to make serious representations about the contribution that it could make, and we welcome them.
	The problems of diet, health and obesity among children have been recognised, and there is now a real will in Government to make improvements. More nutritious school food could help to reduce the risk of diet-related health problems such as obesity, but also of cancer, coronary heart disease and diabetes in later life.
	For some time, the Government have been committed to promoting whole school approaches to health. School meal standards were reintroduced in April 2001. The first standards, incidentally, were in place for more than 20 years and it was promised then that they would be reviewed after a time. As my right hon. Friend the Secretary of State for Education and Skills has made clear, that time has now come. The House will also be aware that in March this year, the Secretary of State announced a package of measures designed to improve significantly the quality of school food and committed £235 million of funding to help achieve it.
	My hon. Friend the Member for Wansbeck mentioned the school meals review panel—an expert group that was convened by the Department as a temporary advisory group. The panel comprises 24 members from a variety of professional backgrounds, including field and academic dieticians and nutritionists, head teachers, governors and other school staff, support staff, catering and industry professionals. The Department also invited observers from other Departments that had a contribution to make to the panel's proceedings to attend its meetings.
	The panel's remit was to advise the Government on how best to meet their commitments in the public health White Paper, which set out to improve school food through the revision of school meals standards aimed at delivering a reduction in pupils' consumption of fat, salt and sugar and an increase in the consumption of fruit, vegetables and other foods containing essential nutrients. Anyone living with young children or who has had them in the past will be aware of the scale of the challenge to get them to eat healthily and nutritiously.
	As my hon. Friend mentioned, the panel's report was entitled, "Turning the Tables: Transforming School Food". He quoted quite extensively from it and I welcome the clear support that he gave to its principal approach and findings when it was published. As I said earlier, it remains subject to consultation that runs to 31 December. The report recommends far-reaching changes to the standard of food and drink in schools. Itrecommends that tough minimum food-based standards should be implemented for school lunches by September 2006, stipulating the portions of food that should be served, and, importantly, restricting children's choices to ensure that they cannot opt out of healthier food.
	Anyone concerned about those issues would recognise that such measures will work best when children receive consistent messages about food from schools. Most would accept that there is no point in setting strict standards for lunch time food, if children can then access foods that have a low nutritional value or are high in sugar and salt elsewhere on the school premises at other times during the school day. To that end, the panel also recommends that standards similar to those for school lunches should also apply to tuck shops, vending machines and other outlets.

Denis Murphy: I was at pains to point out in my contribution that I would never suggest that food or drink that was high in sugar or fat should be available in schools. Rather, I pointed out the danger of the present policy—that unless a sufficient variety of healthy, low-fat, low-sugar and low-calorie foods is available, children will be tempted to eat outside school or bring unhealthy stuff into school with them. That was my point.

John Healey: My hon. Friend did indeed make those points clear in his contribution. What I am trying to set out clearly now are the panel's recommendations. To be clear, the consultation is not on the settled policy of the Government that will result from the process, but on the recommendations of the panel. Views have been invited and this evening's debate provides another valuable contribution.
	The school food trust, a non-departmental public body, is being set up. It will give independent support to schools and parents to help make the transformation to healthier school food. It will also undertake the work necessary to develop standards for other school food.
	The school meals review panel wants children to drink water—and only water—or drinks with a nutritional value. Its view is that substituting any other drink for a healthy drink is a wasted opportunity. In "Vending healthy drinks: A guide for schools", the Food Standards Agency recommends replacing carbonated drinks with a simple healthy offer of water, milk or juice. It has also developed a nutrient profiling model that identifies food types and allocates points, depending on the level of each nutrient per 100 g of food. Products are then categorised on the basis of their overall points score. However, the model has been developed for use in relation to advertising controls only, as part of the Government's programme to regulate broadcast advertising to children of foods that are high in fat, saturated fat, salt and sugar. Food and drink that the model might categorise as "healthy" may not necessarily meet the more stringent standards recommended by the school meals review panel—a point about which my hon. Friend may be concerned.
	There has been some concern and confusion among schools, local authorities and other stakeholders about the Health Education Trust's relationship with the Government. My hon. Friend touched on several matters relating to the HET, which is a charity formed to promote the development of health education of young people in the UK. The HET's director was a member of the school meals review panel and actively contributed to the proposed new standards on which we are consulting. The HET is independent of the Government and as such, the Government rightly have no direct control over its activities. I understand, however, that officials have been in touch with the HET to ensure that its advice is based on Government recommendations and standards currently reflected in published Government toolkits.
	My right hon. Friend the Secretary of State for Education and Skills has already indicated that she is prepared to take tough decisions on which food and drinks will no longer be provided on school premises, where there is a case for taking such decisions. However, matters of detail such as the inclusion or exclusion of a particular diet—for example, those sweetened with artificial sweeteners—or of carbonated drinks will need to be dealt with once the consultation has finished. The products produced by the company in my hon. Friend's constituency fall into that category. I underline the general point that I made at the outset: no decisions have yet been taken and the purpose of the consultation is to bottom out some of the more detailed issues. My hon. Friend has made a timely contribution to this process.
	I can assure my hon. Friend that decisions will be made only after the responses to the consultation have been properly collated and analysed, and only after obtaining further expert advice from the school food trust and the FSA. I hope that he will draw some reassurance from the answers that I have given, and that they will prove useful to him in his continuing discussions with the company in his constituency. If there are further points that he or the company wish to make, I know that my hon. Friend the Under-Secretary will be only too pleased to receive them.
	Question put and agreed to.
	Adjourned accordingly at one minute to Six o'clock.